Business Regulations

B.Com/BBA
3rd SEMESTER CU-FYUGP

MUBASHIRA AP
NIMISHA A
JASIL RISVAN CT

NEW EDITION 2025

BUSINESS REGULATIONS
 MAJOR COURSE

B.Com Semester-3 Calicut University

AUTHORS:

MUBASHIRA A P, M. Com, B.Ed, NET, SET

(Asst Pro. Nasra College of Arts and Science, Tirurkad)

NIMISHA A, M.Com, NET

(Asst Pro. Nasra College of Arts and Science, Tirurkad)

JASIL RISVAN C T, M.Com, MBA (jasilrisvanct@gmail.com)

(Asst Pro. Nasra College of Arts and Science, Tirurkad)

Publisher: Vertex
Research & Technology
(Something Different)
Government Registered TN-27-0012873
6/16, Santam Colony, Anna Nagar West Extension, Chennai - 600101.
Email: support@vertexrt.org / www.vertexrt.org

Copyright: Authors

Year of publication: 2025

ISBN:

Price: Rs.110/-
 PREFACE

Education is undergoing a significant transformation with the introduction of the four-year

undergraduate program. This shift has led to a revamp of syllabus and academic disciplines,
incorporating new additions and global perspectives. Our university is committed to adapting
its curriculum to meet the demands of a rapidly changing world, where business regulations
play a vital role.

We would like to thank publication for undertaking this book. We're pleased to present this
book, tailored to the third-semester syllabus of the University of Calicut's four-year
undergraduate program. It will also benefit those preparing for competitive exams featuring
business regulations.

We would also like to take this opportunity to express our sincere gratitude to our publishers
for bringing our book to fruition.

We welcome valuable suggestions and constructive criticism to improve this book. As a

collaborative effort by three authors, we've strived to create a comprehensive resource that
meets the needs of students and professionals alike.

-AUTHORS
 CONTENTS
1) Introduction to Business Regulations…………………………………01

2) Indian Contract Act -1872……………………………………………..04

3) Offer and Acceptance…………………………………………………..11

4) Void agreements…………………………………………………………29

5) Contingent contracts - Quasi contracts………………………………..39

6) Contract of Indemnity………………………………………………….43

7) Contract of Guarantee………………………………………………….46

8) Contract of Bailment and Pledge……………………………………....51

9) Contract of Agency……………………………………………………..59

10) Contract for Sale of Goods…………………………………………...69

11) Essentials of a contract of sale………………………………………..71

12) Condition and Warranties……………………………………………75

13) Caveat Emptor-Sale by non-owners…………………………………80

14) Rules as to delivery of goods………………………………………….85

15) Introduction to Indian Cyber Law…………………………………...92

16) E-Commerce……………………………………………………………94

17) Cyber Space……………………………………………………………99

18) Penalties and Offences………………………………………………..105

19) Investigation and adjudication under IT act 2000-IPR……………108

Open ended module

Model question paper

Syllabus
 BUSINESS REGULATIONS

CHAPTER-1

INTRODUCTION TO BUSINESS LAW

Chapter Overview

 Definition Law -Features of Law -Sources of Law.

 Business Law-Features of Business Law.

Laws are formal rules and regulations Features of law

established by a governing authority to
maintain order, protect rights, and ensure 1. Rules for Living
justice within a society. Law is a set of guidelines that shape
human behavior.
They define what acceptable behavior
is and outline the consequences for 2. Created by Authority
violating those standards. The existence of Laws are made by a legitimate
certain laws is essential to regulate the authority, such as the government or
social, economic, and political conditions legislature.
of a nation
3. Backed by State Power
Laws guide us on how to conduct
Laws are enforced by the state through
ourselves in public situations. We adhere courts, police, and other institutions.
to specific rules and laws when dealing
with any kind of conflict. Laws provide a 4. Regulates Human Actions
structure to our society. Law maintains order by regulating
individual and organizational behavior.
5. Equal Application
Definitions of law
Laws apply to everyone equally,
Dr. B.R. Ambedkar: without bias, unless specified
otherwise.
“Law is the king of kings. It is more
powerful and rigid than the kings. There is 6. Evolving Nature
nothing higher than law.”
Law adapts to changing societal needs
According to Article 13(3) (a) of the over time.
Indian Constitution, "law" includes any 7. Social Acceptance
Ordinance, order, bye-law, rule,
regulation, notification, custom, or usage Laws are recognized and followed by
society because they promote peace
having the force of law within the territory
and justice.
of India.
8. Focus of Justice
The primary goal of law is to ensure
fairness, equality, and justice for all.
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 BUSINESS REGULATIONS

Business law environment where businesses can

thrive and innovate.
Business law is the body of laws that
govern how business organizations and
business entities are established, run, and
managed. Business law, also known as 3. Resolving Business Disputes
commercial or corporate law, Mercantile Business law offers mechanisms for
Law. resolving disputes and conflicts that
It is the body of rules and regulations arise in the course of business. This
that govern commercial activities and helps to prevent disputes from
transactions, encompassing everything escalating and promotes a more
from forming a business to contracts, efficient and effective resolution
employment, and intellectual property. process.

Features 4. Regulation of Business Activities

1. Protection of Interests Business law regulates various aspects

of business activities, including
Business law safeguards the interests formation, operation, and dissolution.
of both consumers and businesses. It This regulation ensures that businesses
ensures that consumers are treated operate in a way that is fair,
fairly and that businesses operate in a transparent, and compliant with
way that respects their rights. This relevant laws and regulations.
protection promotes trust and
confidence in the marketplace.

2. Promoting Business Growth

Business law provides a framework

that encourages business growth and
development. By establishing clear
rules and regulations, it creates a stable

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 BUSINESS REGULATIONS

SELF ASSESSMENT QUESTIONS

 SHORT ANSWER
1. Define Law.
2. State the importance of Law in
society.

 SHORT ESSAY
1. Explain the need for the Law in a
civilized society.
2. Discuss the various sources of
Law.

 ESSAY
1. Define Business Law. What are the
main features of Business Law?
2. Explain the relevance and need for
Business Law in the current
business scenario.
3. Analyze how Business Law helps
in resolving commercial disputes
and promoting fair trade practices.

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 BUSINESS REGULATIONS

CHAPTER-2

INDIAN CONTRACT ACT, 1872

Chapter overview

 Indian Contract Act 1872

 Meaning of contract
 Classification of contract
 Essential elements of a contract-Section 10

It is the main source of law regulating guarantee, bailment, pledge, and

contact in Indian law. It provides a agency.
framework of rules and regulations which
govern formation and performance of Section 2(e) of the Indian Contract Act,
contract 1872 defines "Agreement" as "Every
promise and every set of promises, forming
Objective: The Act lays down the legal the consideration for each other".
framework for making and enforcing
contracts in India. Contract- meaning

Historical Context: Enacted in 1 The word contract is derived from the

September, 1872, it has evolved to cover Latin word “contractum” which means
general contracts along with specific “drawn together”.
categories like indemnity, guarantee, In simple words, a contract is an
bailment, pledge, and agency. agreement the object of which is to create
Structure: This act deals with general a legal obligation between parties.
principles of the Law of Contract and Definition
some special contract also. That is the
Indian contract Act may be divided into According to section 2 (h) of the Indian
two parts: Contract Act,1872 "An agreement
enforceable by law is a contract"
 General Principles: (Sections 1–75)
– Covers essentials for a valid Contract is an agreement between
contract. competent parties with free consent upon a
legal consideration and with a lawful
 Special Contracts: (section 124 to object to do or to abstain from doing
238) Provisions on specific anything which gives rise to legal
contract types such as indemnity, obligation of the parties

Contract = Accepted a agreement or7

proposal + enforceability by law
 BUSINESS REGULATIONS

These involve activities that are

prohibited by law. They are void from
the outset and carry no legal rights or
CLASSIFICATION OF CONTRACT obligations. Examples include
contracts for committing a crime or
A. On the basis of Validity or fraud.
Enforceability
1. Valid Contract B. On the basis of the formation of
contract
A valid contract meets all the
essential elements required by law. It is 1. Express contract
enforceable in a court of law.
A contract which is made by words
2. Void Contract either spoken or written is said to be an
express contract.
A void contract is one that was valid
at the time of formation but later Example: A written agreement for
becomes unenforceable due to some renting a building.
reason. It has no legal effect.
2. Implied contract
3. Void Agreement
Formed by conduct or circumstances,
This is an agreement that is not not by written or spoken words.
enforceable by law from the beginning.
For example, an agreement made Example: Taking a bus ride, you
without consideration or for an illegal accept to pay the fare.
object. 3. Quasi contract
4. Voidable Contract Not an actual contract, but created by
A voidable contract is enforceable by law to prevent unjust enrichment of
law at the option of one or more parties one party at the expense of another. It
(but not at the option of the other). If is also known as constructive contract
the aggrieved party chooses, they can Example: If A mistakenly pays B’s
either affirm or reject the contract. For water bill, B must repay A.
example, contracts formed through
coercion, misrepresentation, or undue 4. Tacit contract
influence.
A tacit contract is a contract that is
5. Unenforceable Contract formed without spoken or written
words, but through actions, conduct, or
This is a contract that is otherwise circumstances that clearly show an
valid but cannot be enforced in court agreement exists.
due to some technical defect (e.g., not
in writing, improper stamp duty, or It is a type of implied contract, but
time-barred under limitation law). specifically based on silent
understanding.
6. Illegal or Unlawful Contract
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 BUSINESS REGULATIONS

Example: You park your car in a paid 2. Bilateral Contract

parking lot and pay a parking fee
without signing anything. A contract where both parties
exchange promises to perform certain
acts in the future. Obligations exist on
both sides.

Example: A agrees to sell his bike to B for

C. On the basis of the performance of ₹1.5 lakh, and B agrees to buy it. Both A
the contract and B are obligated to fulfill their
promises.
1. Executed contract
Essentials of a contract (Section 10)
It is a contract where both parties
have completely fulfilled their 1. Offer And Acceptance
promises or obligations.
According to the Indian Contract
Example: when A buys a laptop on full Act, a legal relationship is formed
cash settlement from B. Here both the when one party makes an offer and the
parties performed their obligations. other party accepts it, thereby creating
a binding agreement.
2. Executory contract

An executory contract is contracts Offer: Person A makes an offer to

where some or all promises are still Person B: "I'll sell you this bike for
pending meaning both parties have not ₹50,000."
yet fully performed their obligations.
Acceptance: Person B accepts the offer:
Example: A agreed to or construct a "I'll buy the bike for ₹50,000."
house of an in next month and a agree
Contract: With this acceptance, a
to pay rupees 5,00,000 in consideration
binding contract is formed between
for the work. This contract is executory
Person A and Person B.
because it is yet to be carried out.

There is another classification of contract

2. Intention to create legal
on the basis of performance only with a
relationship
little variation they are
For a contract to be valid, parties
1. Unilateral or one sided contract
must intend to create a legally binding
It is a contract where one party has relationship. This means the agreement
performed his obligation either before must be enforceable by law.
or at the time when the contract comes
If the intention is to engage in
into existence.
illegal activities or create an unlawful
Example: A promises to pay 3000 to relationship, the contract will be
anyone who finds and returns his lost deemed void.
cat. Here, A is bound to pay once
someone returns the dog.
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 BUSINESS REGULATIONS

This principle promotes clarity and

stability in agreements by ensuring
parties is genuinely committed to legal
obligations.

3. Lawful Consideration 6. Free Consent

According to the Indian Contract The Indian Contract Act emphasizes
Act, a valid contract requires a lawful that free consent is a crucial element of
consideration, which means something a valid contract. This means both
of value (such as money, goods, or parties must agree to the terms
services) must be given or promised in without:
exchange for a promise or performance
by the other party. This consideration Coercion: No force or pressure
must be lawful and not against public should be applied.
policy. Undue Influence: No exploitation of
4. Certainty of Meaning power or influence.

The Indian Contract Act emphasizes Fraud: No deception or

that certainty of meaning is crucial for misrepresentation.
a valid contract. This means the terms Misrepresentation: No false or
and conditions outlined in the contract misleading information.
should be clear, precise, and
unambiguous, leaving no room for Mistake: It refers to an erroneous
misinterpretation. belief at the time of making a contract

5. Capacity of Parties When both parties provide free

consent, they enter into the contract
According to Indian Contract Act
willingly and with a clear
“Every person is competent to contract
understanding of its terms.
who is of the age of majority according
to the law to which he is subject, and 7. Lawful Object
who is of sound mind and is not
disqualified from contracting by any The Indian Contract Act requires that
law to which he is subject.” the object of a contract must be lawful.
This means the purpose or
consideration of the contract should
Age of Majority: The person must
not be:
be at least 18 years old (as per Indian
law). Illegal: Not violating any law.

Sound Mind: The person must be of Immoral: Not contrary to moral

sound mind, capable of principles.
understanding the terms and
implications of the contract. Opposed to Public Policy: Not10
against the interests of society or
Not Disqualified by Law: The public welfare.
person should not be disqualified
 BUSINESS REGULATIONS

formalities for a contract to be valid.

While contracts can be oral or written
Contracts Requiring Formalities
A lawful object ensures that the  Written: Some contracts, like
contract is valid and enforceable. those for sale of immovable
property, require writing.
 Attestation: Certain contracts may
8. Agreements Not Expressly require attestation by witnesses.
Declared Void  Registration: Specific contracts,
such as sale deeds, require
The Indian Contract Act, 1872,
registration under the Registration
specifies certain agreements that are
Act. The specific formalities
void. These include:
depend on the type of contract and
 Restraint of Marriage (Section 26) applicable laws.
 Restraint of Trade (Section 27)
 Restraint of Legal Proceedings
(Section 28)
 Uncertain Agreements (Section 29)
 Wagering Agreements (Section 30)

These agreements are considered void

and unenforceable under the law.

9. Possibility of performance

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

Contract to do an 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.

Example: A agrees with B to discover

treasure by magic. The agreement is
void.

10. Legal Formalities

The Indian Contract Act, 1872,

doesn't always require specific

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 BUSINESS REGULATIONS

CASE STUDIES

Wagering Agreements (Void)

Case: Gherulal Parakh v. Mahadeodas Maiya, AIR 1959 SC 781

In this case, there was a dispute over money that one person lost in a bet (a wager). The person
wanted to recover the money, but the court had to decide whether they could do that.

The case was about a wagering agreement, which is essentially a bet where people agree to
win or lose money based on some event happening (like betting on the outcome of a game).

Court's Decision: The court ruled that wagering agreements are void. This means that such
betting agreements are not legally enforceable. However, betting or wagering is not
considered illegal unless there are specific laws in that state that prohibit it (for example, in
states like Maharashtra and Gujarat, wagering is illegal).

Agreement Void for Uncertainty

Case: Guthing v. Lynn (1831) 2 B & Ad 232

In this case, there was an agreement between two people: one person (the buyer) promised to
pay an extra amount of money if a horse proved to be "lucky."

Problem: The term "lucky" was unclear. It wasn't explained what exactly "lucky" meant in this
context. Was it about the horse winning races, or something else? No one knew for sure.

Court's Decision: Because the term "lucky" was too vague, the court said the agreement was
uncertain and could not be enforced. In legal terms, they declared the agreement "void"
because it was not clear enough to understand or act upon.

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 BUSINESS REGULATIONS

Void Agreement

Case: Ravi, a 17-year-old boy (a minor), entered into a contract with Ramesh to sell his bike
for ₹40,000. Ramesh paid the money, but later Ravi refused to give the bike. Ramesh went to
court to enforce the agreement.

Legal Issue: Is an agreement with a minor valid and enforceable?

Judgment: The court held that the agreement was void because a minor is not legally
competent to enter into a contract under Section 11 of the Indian Contract Act, 1872.

1. What are the essential elements of

a contract?
SELF ASSESSMENT QUESTIONS

 SHORT ANSWER
1. Meaning of Contract
2. Express Contract
3. what is Agreement
4. what do you mean by voidable
Agreement
5. Executed Contract?
6. Unilateral Contract
7. Illegal Contract

 SHORT ESSAY
1. What is the Importance of
Agreement
2. Discuss different type of
Contracts?
3. How does an agreement become
Contract?
4. What are the Contracts that is
expressly declared as good by law.

 ESSAY

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 BUSINESS REGULATIONS

CHAPTER-3

OFFER OR PROPOSAL

Chapter overview

 Offer and Acceptance-Features of offer-Classification-Acceptance-Revocation of

offer
 Consideration-Features-Exception to general rule consideration is essential-
Doctrine of privity of contract-Exceptions
 Capacity of parties-Minor-Minors Agreement- Persons of unsound-Persons
Disqualified by law
 Free consent-Coercion-Undue influence-Fraud-Mistake

Offer and Acceptance 1. Offeror (or Proposer): The person

making the proposal or offer.

2. Offeree: The person to whom the

proposal or offer is made.

3. Promisor: The person who makes a

promise (the offeror, once the offer is
accepted).
Section 2(a) of the Indian Contract Act,
1872 defines "Proposal" or "Offer" 4. Promisee: The person who receives the
promise (the offeree, once the offer is
"When one person signifies to another his
accepted).
willingness to do or to abstain from doing
anything, with a view to obtaining the Features of a valid offer
assent of that other to such act or
abstinence, he is said to make a proposal." 1. offer should have an Intention to
create legal relationship
A proposal, in the context of contracts,
refers to one party's willingness to do The Indian Contract Act requires
something or provide something in offers to be made with the intention of
exchange for consideration (e.g., payment, creating a legal relationship to be
promise, or action) from another party. enforceable
This expression of readiness forms the
Example: Suppose Rohan invites his
basis of an agreement when accepted by
friend, Priya, to dinner at his home.
the other party.
This is a social invitation without any
Terminology in Offer intention to create a legal relationship.

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 BUSINESS REGULATIONS

However, if Rohan advertises in a offer in itself. Instead, it is an action

newspaper offering to sell his car for that invites others to make an offer.
₹5 lakh to anyone interested, this is an
offer with the intention to create a The party making the invitation does
legal relationship. not intend to be bound as soon as it is
accepted rather; they are inviting
negotiations or further communication.

2. Offer May Be Conditional 5. An offer must be communicated

to the offeree
An offer can be made with certain
terms and conditions. The offeror (the This means the person to whom the
person making the offer) may impose offer is made (the offeree) must
specific conditions which must be actually know about the offer.
fulfilled by the offeree (the person Only then can they accept it and form a
receiving the offer) before a contract valid contract.
can be formed.

However, if the offeree does not accept

the conditions, it is not considered 6. An offer should not contain a
acceptance and the contract never term the non-compliance of
formed. which would amount to
acceptance.

This rule means that the offeree must

3. Clarity and Definiteness clearly accept the offer, either by
saying “yes” or by doing something
The offer must be clear, specific, and that shows they agree. You cannot
unambiguous so that the person force someone into a contract just
receiving it (the offeree) understands because they didn't reply or didn't act.
exactly what is being offered.
Classification of offer
If A says to B, "I might sell you my car
next month," this is not a valid offer A. Classification on the Basis of Mode of
because it is vague and uncertain. But Offer
if A says, "I will sell you my Blue car
for ₹5 lakh," it is a definite offer a) Express Offer

When an offer is clearly

communicated in words, either spoken
4. Invitation to Offer is Not an or written.
Offer
Example: A writes to B: "I offer to sell
Under the Indian Contract Act, 1872, my bike for ₹20,000."
it is crucial to distinguish between an
offer and an invitation to offer.

An invitation to offer (also known as b) Implied Offer

invitation to treat) is not a proposal or
15
 BUSINESS REGULATIONS

When an offer is not made in words An offer to supply goods or services

but is inferred from conduct or continuously for a fixed time or on
circumstances. demand at a set price.

Example: A bus starts its route and a Example: A company offers to supply
passenger boards—by conduct, both coal to a factory for 6 months at
imply a contract. ₹1000/ton. The factory can place
orders as needed.
B. Classification on the Basis of Offerees
c) Counter Offer
a) Specific Offer
When an offeree modifies the terms
An offer made to a specific person or of the original offer, thereby rejecting
group that can be accepted only by the original offer and proposing a new
them. one.

Example: A offers to sell his house to Example: A offers to sell a car for ₹5
B for ₹50 lakh. lakh. B says he’ll buy it for ₹4.5 lakh.
This is a counter offer.
b) General Offer
Acceptance
An offer made to the public at large,
and can be accepted by anyone who Section 2(b) of the Indian Contract Act,
fulfills the conditions. 1872 defines acceptance “When the person
to whom the proposal is made signifies his
Example: A company publishes in a
assent thereto, the proposal is said to be
newspaper: “₹5,000 reward to anyone
accepted. A proposal, when accepted,
who finds and returns our lost dog.”
becomes a promise.”

Once the offer is accepted, it transforms

C. Classification on the Basis of Nature into a promise, which is the foundation of
of Offer a contract.

Rules of valid acceptance

a) Cross Offer
1. Acceptance Must Be
When two parties make identical
Communicated
offers to each other in ignorance of
each other’s offer no acceptance The offeror must be made aware of the
occurs, so no contract is formed. acceptance. Silent or uncommunicated
acceptance is not valid.
Example: A sends an offer to sell
goods to B. At the same time, B sends 2. Acceptance Must Be Absolute and
an offer to buy the same goods at the Unqualified
same price. Both do not know about
the other's offer. The acceptance must be clear,
without any conditions or variations to
b) Standing/Open Offer the original offer. Any change in terms

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 BUSINESS REGULATIONS

is considered a counter-offer, not an Revocation means withdrawing or

acceptance. cancelling an offer or acceptance before it
becoming a contract. Revocation of an
3. Acceptance Must Be In the offer
Prescribed Mode
Section 6 of Indian contract act, explains
If the offer specifies a mode (e.g., by about how an offer comes to end. That is
email, letter, or courier), it must be revocation of an offer.
followed. If no mode is specified, any
reasonable mode is acceptable.

4. Acceptance Must Be Within the I. Section 6(1) By the communication

Time Prescribed of notice of revocation by the
proposer to the other party;
If the offer specifies a time limit,
acceptance must happen within that This means a offer can be revoked
time. If no time is stated, it should be (taken back) by the person who made
accepted within a reasonable period. it, as long as the revocation is
communicated to the other party
5. Acceptance Must Be Made by the before they accept it.
Offeree
II. Section 6 (2) By the lapse of the
Only the person to whom the offer is time
made can accept it. A third party
cannot accept the offer on someone Deals with revocation of proposals and
else's behalf without authority. acceptances, and Clause (2)
specifically states:
6. Acceptance Must Be While the
Offer Is Still in Force "A proposal is revoked by the lapse of
the time prescribed in such proposal
An offer can be revoked anytime for its acceptance, or, if no time is so
before it is accepted. Once an offer is prescribed, by the lapse of a reasonable
revoked, acceptance has no legal time, without communication of the
effect. acceptance."
7. Acceptance by Conduct (Implied III. Section 6(3) failure of the acceptor
Acceptance) to fulfill a condition
Sometimes acceptance is implied “By the failure of the acceptor to
through action, especially in unilateral fulfill a condition precedent to
contracts where no verbal acceptance.”This means that if the
response is required. proposer has attached a condition that
Revocation of an offer must be fulfilled before acceptance,
and the acceptor does not fulfill it, the
According to Indian Contract Act 1872 offer is revoked.
section 6 describes about the revocation of
an offer. IV. section 6(4) Death or Insanity of
the Offeror or Offeree
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 BUSINESS REGULATIONS

It is a method of evocating an offer. If Example: P agrees to sell his house to

either party dies or becomes insane Q, on the condition that R (Q’s friend)
before acceptance, the offer is revoked, makes the payment. Even if R pays,
provided the offeree knows about it. the contract remains valid.

V. By Counter Offer 3. Consideration may Be Past, Present,

VI. By Rejection or Future
VII. By Destruction of Subject Matter
It can occur before the promise (past),
at the same time (present), or after
(future).
Consideration

Section 2(d) of the Indian Contract Act,

1872 defines the term “consideration”. Examples:
Here's the exact wording of the section:
Past: P saves Q’s property from a fire.
"When, at the desire of the promisor, the Later, Q promises to pay P ₹5,000.
promise or any other person has done or This is enforceable.
abstained from doing, or does or abstains
Present: P buys goods from Q and
from doing, or promises to do or to
pays at once.
abstain from doing, something, such act or
abstinence or promise is called a Future: P promises to deliver goods
consideration for the promise." next week, and Q agrees to pay upon
delivery.
Features of Consideration
4. Must Hold Some Legal Value
A contract, without consideration not
enforceable by low. The consideration must be
recognized as valuable in the eyes of
1. Must arise at the Promisor’s
the law, though it doesn’t have to be
Request
monetary.
Consideration should be provided
Example: P promises to give a gift
only when the promisor has asked for
without expecting anything in return.
it.
Such a promise is not legally
Example: P assists Q's son without Q’s enforceable.
request. Later, Q promises to pay P.
5. Must Be Genuine and Not
This promise is not legally binding, as
Imaginary
the act was not done at Q’s request.
Consideration should be practical and
2. Can Be Provided by the Promisee or
legally valid—not uncertain,
Another Person
impossible, or illusory.
Consideration doesn't necessarily
Example: P promises to fetch a Moon
have to come from the promisee; it can
from the sky. This is an imaginary act
be from any third party.

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 BUSINESS REGULATIONS

and does not exist as a valid It should create on the basis of nature
consideration. pure love and affection

6. Must Be Lawful  Section 25(2) Agreements to

compensate prior work done as
The consideration must not involve voluntary service
anything illegal, immoral, or against
public interest. Section 25, Subsection 2 of the Indian
Contract Act says that a promise made
Example: P offers Q ₹10,000 to injure without consideration can still be valid
R. This agreement involves illegal if it is made to reward someone who
consideration and is therefore void. has already voluntarily done something
7. Need Not Be Proportionate or Fair for the promisor, or has done
something the promisor was legally
Consideration doesn’t have to match required to do.
the value of what is received; even a
nominal amount is enough if agreed by  Section 25(3) an agreement to pay a
both parties. time-barred debt.

Example: P sells a Bike worth ₹1 lakh It is valid and enforceable, even

to Q for ₹10000. If both parties agree without new consideration It is in
willingly, the contract becomes valid. writing, and Signed by the debtor or
their authorized agent. This allows a
Exceptions to general rule consideration debtor to make a fresh promise to pay
is essential a debt that can no longer be legally
recovered due to expiration of the
Certain contract without consideration
limitation period (usually 3 years).
will be enforceable (valid) in the following
conditions. Example: Noushad took a loan of
₹50,000 from Shafeeq in 2018.
 Section 25(1) the contract that has
Shafeeq did not file a case for recovery
been created out of pure love and
within the 3-year limitation period. In
affection
2023, Noushad writes and signs a letter
It says that when a contract has been to Shafeeq: “I know I owe you
formed as a result of natural love and ₹50,000. I promise to repay it soon.”
affection, the contract without Even though the original debt is time-
consideration will be enforceable. But barred, this written and signed promise
the following conditions should be revives the obligation. Now Shafeeq
satisfied. can legally enforce the payment based
on this new promise.
It should be in written form
 Completed Gift
The parties to contract should be in a
close relationship. (Near relatives) A contract without consideration can
still be valid in some cases, and one
It must be registered under the law. such exception is a completed gift. A
gift doesn’t need any payment or
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 BUSINESS REGULATIONS

return favor to be valid. Once a gift is English law exceptions.

properly given, it is legally binding Consideration Must come Can come
between the giver (donor) and the from the from a third
receiver (donee), even if there’s no promisee. party (as per
Section
close relationship or love between
2(d))
them. However, the gift must be fully Can a No Generally
completed to be valid. stranger sue? no, unless
exceptions
 Contract of agency apply
According to Section 185 of the
Contract Act, an agency can be created
without any consideration.
This means that when someone is
Exceptions to the Doctrine of Privity
made an agent, the appointment is
(When a third party CAN sue)
valid even if no payment or benefit is
given in return. Trusts: A beneficiary of a trust can
enforce the trust, even if not a party to the
 Contract of guarantee. contract. Even though the beneficiary is
not a party to the original contract that
A guarantee contract is valid even if created the trust, they have a right to
there is no direct benefit or enforce the terms of the trust.
consideration to the surety, as long as
the principal debtor receives Family Settlements: In case of family
consideration. arrangements, a member benefiting from
the arrangement can sue. Family
Doctrine of Privity of Contract/stranger Settlements: In case of family
to the contract/stranger to the arrangements, a member benefiting from
consideration the arrangement can sue.

The Doctrine of Privity of Contract Marriage or Partition Contracts:

means that: Only the people who are Agreements made during marriage or
parties to a contract can sue or be sued on partition among family members can be
it. A third party (someone not part of the enforced by persons benefiting from them.
contract) cannot enforce it. Indian law
Acknowledgement or Estoppel: If a
Indian Contract Act, 1872, Section 2(d) party acknowledges a third party’s right
provides some flexibility: A contract may under the contract or acts in a way that
have consideration given by someone leads the third party to rely on it, then they
other than the promisee, i.e., a third party can be bound.
can provide consideration. But, only a
party to the contract can sue a stranger Agency: A principal can enforce
cannot enforce the contract. contracts made by an agent on their behalf.

Aspect English law Indian law Assignment: Rights under a contract can
Privity of Strictly Same rule be assigned to a third party, who then can
contract followed in but some sue.

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 BUSINESS REGULATIONS

Capacity of parties  Act should not make any kind of

Hardship to Minors
Section 11 of Indian contract act defines
“Every person is competent to contract The courts are very careful in dealing
who is of the age of majority according to with minors. The law says that even if
the law to which he is subject, and who is a minor makes a mistake, they cannot
of sound mind, and is not disqualified from be forced to follow a contract because
contracting by any law to which he is that would cause unfair hardship to
subject”. someone who is still growing and
learning.

 A Minor Can Be a Beneficiary in a

Contract

Even though a minor cannot enter into a

contract, they can still benefit from one. If
someone makes a contract for the benefit
of a minor, that contract can be enforced
on behalf of the minor.

Position of Minor’s agreement

1. Agreement with a Minor is Void

from the Start (Void ab initio)
MINOR  If someone signs a contract with a
person under 18, it has no legal
Section 3 of the Indian Majority Act, value.
1875 states: “Every person domiciled in  The contract is not valid, and cannot
India shall attain the age of majority on be enforced in court.
his completing the age of eighteen years, 2. Minor as a Beneficiary or Promisee
and not before.”  A minor can receive benefits from
a contract, even though they can’t
The age of majority is 21 years instead enter into one.
of 18 in special cases involving  Example: If someone promises to
guardianship or property under court pay minor money or give property,
supervision. An agreement with minor is the minor can enforce that promise.
not valid from the beginning. 3. No Ratification after Majority
 If a person made a contract as a
 Law Always Protects Minors by minor, they cannot confirm or
Considering Their Age approve it after turning 18.
 A contract that was void as a minor
The law understands that minors
stays void forever.
(people below 18) may not fully
4. No Compensation for Benefits
understand the consequences of their
Received
actions. So, it does not allow minors to
 If a minor gets money or goods in a
be bound by contracts this is to protect void contract, they cannot be
them from being exploited or taken forced to pay it back.
advantage of.
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 BUSINESS REGULATIONS

 The law does not create liability To make a valid contract, a person must
just because the minor received a be of sound mind. This means the person
benefit. should be able to:
5. Minor Can Always Claim to be a
Minor (No Estoppel)  Understand the terms of the
 A minor can always say in court contract, and
that they were underage at the time  Make a reasonable decision about
of the agreement. it.
 Even if they lied about their age, If someone does not have this mental
the law still protects them. capacity, they are considered of unsound
mind, and any contract made during that
6. No Specific Performance against
time is not valid.
Minor
 The court will not force a minor to There are three main types of people
perform or complete a contract. considered of unsound mind:
 They are not legally bound to do
anything under such agreements. 1. Idiots
7. Minor and Partnership
People who have a permanent lack of
 A minor cannot be a full partner in
a business. understanding from birth. They can
 But they can be admitted to receive never enter into a valid contract.
benefits, like profit — with consent 2. Lunatics
from all partners.
 They are not responsible for any People who may have temporary
business losses. periods of madness but are sometimes
8. Minor as an Agent mentally stable. They can make
 A minor can work as an agent contracts only when they are of sound
(representing someone else). mind.
 But the minor is not personally
responsible — the principal is 3. Drunkards/Intoxicated Persons
liable for the agent’s actions.
9. Minor Cannot Be Declared Insolvent If someone is drunk or intoxicated to
 Since a minor cannot make valid the point that they cannot understand
contracts or borrow money legally, what they are doing, they cannot enter
 They cannot be declared insolvent into a contract during that time.
by a court.
10. Minors liability for necessities.  A drunkard or drunken person
 When necessities are supplied to a means someone who is under the
minor or their family, the payment influence of alcohol to such an
can be recovered from the minor’s extent that they cannot
property, but not from the minor understand what they are doing
personally." or cannot make sound decisions.
 An intoxicated person is
someone who is under the
Persons of unsound mind (section 12)
influence of alcohol or drugs to
the point that
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 BUSINESS REGULATIONS

contract. However, in England, they may

have immunity in certain cases.
Other persons who are legally
disqualified

There are seven categories of persons FREE CONSENT

who are legally disqualified from entering
into a contract: Section 13 of the Indian Contract Act,
1872 – Consent “Two or more persons are
said to consent when they agree upon the
same thing in the same sense.”
1. Alien Enemies
As per section 14 of Indian contract act
A person from a country that has gone to
1872, consent is said to be free when it is
war with India. Contracts with such
not caused by
individuals are invalid during wartime.
Coercion Undue influence Fraud
2. Foreign Sovereigns and (section 16)
(15) (section17)
Ambassadors
Misrepresentati Mistake
They can enter into contracts only on section (20,21
section(18) and 22
through an agent, but they cannot be sued
in Indian courts unless they consent to it.

3. Convicts

Persons who are currently serving a

prison sentence. They cannot enter into a
valid contract while imprisoned.
When there is no consent there is no
4. Insolvents contract. Salmond explained it as error in
Individuals declared insolvent by a consensus.
court. They lose the capacity to contract,
“Consensus ad idem" It means that both
especially regarding their property.
parties in a contract fully agree on the
5. Statutory Corporations or same subject, with the same
Companies understanding. There is no confusion
about what is being agreed upon.
These bodies can enter into contracts
only within the powers granted to them
under their Memorandum of Association.
Contracts beyond those powers are invalid. Coercion (15)
6. Professional Persons (in some
According to section 15 of Indian
jurisdictions)
contract act “Coercion is the committing
In India, professional persons (e.g., or threatening to commit any act forbidden
doctors, lawyers) can be sued for breach of by the Indian Penal Code, or the unlawful
detaining or threatening to detain any
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 BUSINESS REGULATIONS

property, with the intention of forcing situation where one party is forced or
someone to enter into an agreement.” threatened to enter into a contract against
their will. The key point is that duress
Key Features of Coercion involves actual violence or a serious threat
of violence to a person. If threat against
1. Act Forbidden by Law (IPC) the goods or property of a person it is not
considered as duress.
If someone commits or threatens to
commit an act that is prohibited under the Threat to suicide
Indian Penal Code (IPC) like assault, theft,
or blackmail it is considered coercion. When someone says, "If you don’t do
what I say, I’ll kill myself,"
2. Unlawful Detention
They are using emotional blackmail. This
If a person unlawfully detains another is a kind of threat, and in law, it can count
person or their property (e.g., holding as coercion because it pressures the other
someone or their belongings against their person to act out of fear or guilt, not by
will), it is also coercion. their own free choice. So, threatening
suicide to make someone sign a contract or
3. Intention to Enter a Contract do something is considered coercion under
the law.
Coercion must be used with the specific
purpose of forcing someone to enter into a
Undue Influence (16)
contract. If there’s no intent to form a
contract, then it is not relevant under this According to Indian Contract Act Undue
section. Influence defined as "A contract is said to
be induced by 'undue influence' where the
4. Coercion can be used by a Party to
relations subsisting between the parties
contract or even by a Stranger.
are such that one of the parties is in a
position to dominate the will of the other
Coercion can be applied not only by one
and uses that position to obtain an unfair
of the parties to the contract but also by an
advantage over the other."
outsider. As long as coercion influences
the contract, it is legally relevant.
Undue influence refers to the use of
improper or excessive emotional, mental,
5. Place is Irrelevant
or moral pressure on someone, especially
It does not matter where the coercion in a position of vulnerability, to persuade
occurs whether in India or outside. As long them to agree to something or enter into a
as it influences a contract governed by contract against their free will.
Indian law, it is treated as coercion.
 There is presumption of undue
Duress influence in the following
relationships:
It is the equivalent term to coercion as  Parent and child
per English Law. Duress refers to a  Guardian and ward
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 BUSINESS REGULATIONS

 Doctor and patient Section 17 of the Indian Contract Act

 Solicitor and client defines "Fraud."Fraud includes any act
 Trustee and beneficiary done by a party to a contract (or with their
 Religious advisor and disciple knowledge or consent) with the intent to
 Fiancé and fiancée. deceive the other party or to induce them
to enter into the contract. It includes:
 There no presumption of undue
influence in case of relationship 1. Suggesting something as a fact that is
 Landlord and tenant not true, knowing it’s false.
 Debtor and creditor
 Husband and wife 2. Actively hiding a fact when there's a
 Principal and agent duty to disclose it.

In this following case of the existence of 3. Making a promise without any intention
undue influence should be proven in front of keeping it.
of the court.
4. Any other act meant to deceive.
Pardanashin Woman
5. Any act or omission the law considers
In cases of undue influence, there is a fraudulent.
special situation involving a Pardanashin
woman. A Pardanashin woman is someone Elements of Fraud
who lives in seclusion, without contact
1. Fraud must be committed by a party to
with the outside world, and is not exposed
the contract
to its tricks or corruptions. If someone
enters into a contract with a Pardanashin
The person who is doing the fraud
woman, they must prove in court that her
should be one of the people involved
consent to the contract was given freely
in the contract.
and without any undue influence.
2. False statement or suggestion
A person making a contract with a
Pardanashin woman must prove the One person says something that they
following: know is false, or hides the truth on
purpose. This kind of false statement is
 She personally signed the
considered fraud.
agreement, fully understanding
what she was doing. 3. Hiding important facts
 She clearly understood the nature
and consequences of the If someone hides a very important
transaction. fact that could affect the other person's
 She received advice from someone decision to agree to the contract, it is
who was independent and had no fraud.
personal interest in the deal.
4. False promise with no intention to
Fraud (17) perform
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 BUSINESS REGULATIONS

If someone makes a promise in the misrepresentation. Here’s a breakdown of

contract but never had any intention of the relevant points
keeping that promise from the
beginning, that’s also fraud. Silence can be considered fraud in the
following situations:
5. Intention to deceive 1. When Silence is Equivalent to a False
Representation.
If a person enters into a contract with
the clear aim of tricking or cheating 2. When the Person Has a Duty to
the other party, this is fraud due to bad Disclose.
intention.
3. When Silence is intended to Deceive.
6. Acts declared as fraud by law
Misrepresentation (18)
Some actions are already defined by Section 18 defines misrepresentation as
law as fraudulent. If someone does any "A false statement made by a party with
of those acts, it is automatically intent to mislead or without knowing its
considered fraud. falsity"

7. The false information must be  It could involve either a deliberate lie

important or an unintentional false statement
(without any fraudulent intent).
The false information or hidden fact  Misrepresentation is an innocent but
must be about something important untrue statement of a material fact
(material) to the contract—not  Made with the honest belief that it is
something small or irrelevant. true
 Intended to induce the other party
8. The other party must be deceived into a contract,
 Relied upon by that party in entering
The fraud must actually fool or
the agreement.
deceive the other party. If nobody was
tricked, then it’s not considered fraud.
Mistake (20, 21&22)
9. Loss or damage must happen
According to Section 20 of the Indian
The person who was tricked must Contract Act, a contract is void when both
have suffered some kind of loss or parties to an agreement are under a
harm because of the fraud. mistake as to a matter of fact essential to
the agreement.
Silence as Fraud
 Mistake means a wrong belief or
Section 17 of the Indian Contract Act, misunderstanding about something.
1872, defines fraud and also mentions  If an agreement is made under a
silence as fraud in certain circumstances. mistake, it means the parties did not
According to this section, silence can be truly agree (no real consent).
considered fraud if it is equivalent to a
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 BUSINESS REGULATIONS

 When a mistake cancels consent, the b) Mistake as to the existence of

agreement becomes invalid. subject matter
 Mistakes can happen in many
situations during the formation of a Example: A sells a horse to B, both
contract. unaware that the horse is already
dead.
Classification of Mistakes
c) Mistake as to the identity of the
A. Mistake of Law subject matter

It refers to ignorance or Example: A agrees to sell one item;

misunderstanding of the legal rules. B believes it's a different one.

It can be further classified into: d) Mistake as to the quality of subject

matter:
1. Mistake of Indian Law
Example: Both think a painting is
Not excusable. Everyone is presumed by a famous artist, but it’s a fake.
to know the law of their own country.
e) Mistake as to the quantity of
2. Mistake of Foreign Law subject matter:
Treated as a mistake of fact and may Example: Both agree on a sale,
be excusable because foreign law is thinking it's for 100 units, but the
not considered to be within common actual agreement mentions 10
knowledge. units.
B. Mistake of Fact f) Mistake as to the title of subject
This involves a misunderstanding about matter:
a fact that is essential to the contract. It is Example: A agrees to sell land to
divided into: B, but both are unaware that B
1. Bilateral Mistake already owns the land.

Both parties are under a mistake. 2. Unilateral Mistake

The mistake must be about a fact Only one party is under a mistake.
essential to the agreement. Generally, contracts are not voidable
When such a mistake occurs, the for a unilateral mistake unless: The
contract is void under Section 20 of the other party is aware of the mistake and
Indian Contract Act. takes advantage of it. The mistake is
about the nature of the contract or
Types of Bilateral Mistake: identity of the person involved.

a) Mistake as to the subject matter

Example: Both parties believe a

particular good exists, but it has
already been destroyed.
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 BUSINESS REGULATIONS

CASE STUDIES

1) Taylor v. Laird (1856)

A captain, Laird, was employed by a shipping company to command a ship. During a

voyage, he voluntarily gave up his role as captain and started performing duties as an
ordinary crew member. Upon return, he demanded wages for the work he had done as a
crew member. However, he had never informed the ship owners of his decision to step
down or his intention to be paid as a crew member.

Judgment: The court ruled that there was no contract, as no offer to work under new
terms had been communicated to the ship owners. Therefore, they had not accepted any
such offer, and Laird could not claim wages.

2) Revocation of offer

Routledge v Grant (1828) 130 ER 920

Grant made an offer to sell his house to Routledge and stated that the offer would remain open for
six weeks. However, before Routledge accepted the offer, Grant revoked it within that six-week
period.

Holding:, the court held that Grant was entitled to revoke the offer at any time before acceptance.
Since Routledge had not provided any consideration (payment or something of value) to keep the
offer open, Grant was not legally bound to keep it open for six weeks.

Legal Principle: Unless there's consideration to keep an offer open (creating an option contract), the
offeror can revoke it at any time before acceptance.
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 BUSINESS REGULATIONS

3) Case: Kedarnath Bhattacharji v. Gorie MohammadCitation: (1886) ILR 14 Cal 64 Court: Calcutta
High Court

The defendant (Gorie Mohammad) promised to donate Rs. 100 for the construction of a Town Hall
in Howrah. The plaintiff (Kedarnath), a municipal commissioner, entered into contracts with
builders based on this promise. The defendant later refused to pay, claiming there was no
consideration, as he did not receive any benefit personally.

Judgment: The court enforced the promise, ruling that:

"Though the promise was gratuitous, the plaintiff incurred a liability by acting on it. That constitutes
valid consideration".

4) Contract with Minor Mohori Bibee v. Dharmodas Ghose (1903) 30 Cal. 539 (PC)

Case Summary: In this landmark case, the Privy Council addressed the issue of the validity of
contracts entered into by minors under the Indian Contract Act, 1872. Dharmodas Ghose, a minor,
had entered into a contract with Mohori Bibee, a moneylender, for the loan of a sum of money.
Ghose, in turn, mortgaged his property as security for the loan. Later, when Ghose sought to avoid
the contract on the grounds of his minority, the Privy Council ruled in his favor, holding that the
contract was void due to his status as a minor.

5) Case Study: Pharmaceutical Society of Great Britain v. Boots Cash Chemists (1953)

Boots ran a self-service store where customers picked up medicine from shelves and paid at the
cashier’s counter.

The Pharmaceutical Society claimed this violated the law, which required a registered pharmacist to
supervise the sale of medicines.

Decision: The court said: Placing goods on a shelf is not an offer, but an invitation to offer.

Display of goods in a store is not an offer, but an invitation to offer.

The actual offer is made by the customer when they go to pay.

6) Persons Disqualified Law: Kedar Nath v. State of West BengalCitation: AIR 1953 Cal 405

Kedar Nath, the plaintiff, was an adjudicated insolvent at the time of entering into a contractual
agreement. The plaintiff filed a suit to enforce the contract despite being declared insolvent.

The issue arose whether a person who has been adjudicated an insolvent under the Provincial
Insolvency Act, 1920 (now replaced by the Insolvency and Bankruptcy Code, 2016) is legally
capable of entering into a valid contract. The Calcutta High Court held that an insolvent person is
disqualified from contracting unless the insolvency proceedings have been concluded and the
individual has been discharged from insolvency. 29
 BUSINESS REGULATIONS

7) Persons of un sound mind - Case Study: Inder Singh v. Parmeshwardhari SinghCitation: AIR
1957 SC 510

Inder Singh entered into a property transaction with Parmeshwardhari Singh. The latter was alleged
to be of unsound mind at the time of the contract. It was argued that the agreement was invalid due
to his mental condition.

Judgment: The Supreme Court held that a person must be of sound mind at the time of the contract.
Occasional unsoundness does not make all contracts void. Since there was no conclusive evidence
of unsoundness during the contract, the agreement was held valid. A person who is sometimes of
unsound mind can contract during lucid intervals, and the burden of proof lies on the person alleging
unsoundness.

8) Coercion: Chikham Ammiraju v. Chikham Seshamma & Ors.

Defendants: Chikham Seshamma & Others (family members)

The plaintiff, Ammiraju, threatened to commit suicide unless his wife and son agreed to execute a
deed transferring family property to his brother. Fearing for his life, they executed the deed. Later,
they challenged the validity of the deed, claiming it was executed under coercion.

Judgment: The Madras High Court held that a threat to commit suicide does constitute coercion
under Section 15.

9) Undue Influence: Ranee Annapurni Nachiar v. Swaminatha Ayyar

The Ranee Annapurni Nachiaran elderly and inexperienced woman was under the influence of a
trusted adviser, the Swaminatha Ayyar.

She transferred a large portion of her property to him without receiving fair consideration.

The transfer was challenged on the ground that it was made under undue influence.

Judgment: The court held that the contract was made under undue influence as the defendant was in
a position to dominate the will of the plaintiff.

The plaintiff did not fully understand the nature of the transaction, and the defendant had unfairly
gained from it.

10) Fraud: Ningawwa v. Byrappa Shiddappa Hireknarbar

In this case, the husband of an illiterate woman misrepresented the contents of a document, leading
her to believe she was signing a deed concerning two of her lands. In reality, the document pertained
to four of her lands. The husband's deliberate misrepresentation exploited her illiteracy and trust.

Judgment: The Supreme Court held that the husband's actions amounted to fraud as defined under30
Section 17. The Court emphasized that any act fitted to deceive, including misrepresentation of
document contents to an illiterate person, vitiates free consent.
 BUSINESS REGULATIONS

11) Mistake: Tarsem Singh v. Sukhminder Singh (1998)

Facts: In this case, Tarsem Singh agreed to sell a plot of land to Sukhminder Singh. Both parties
believed the land to be 10 acres in size. However, it was later discovered that the actual size was 15
acres.

Judgment: The court held that since both parties were under a mutual mistake concerning a matter of
fact essential to the agreement the size of the land the contract was void under Section 20. The
absence of a "consensus ad idem" (meeting of minds) meant there was no valid contract.

12) Misrepresentation: Satya Brata Ghose v. Mugneeram Bangur & Co.

In this case, Mugneeram Bangur & Co. represented a piece of land as having no requisition on it.
Relying on this representation, Satya Brata Ghose agreed to purchase the land. However, after
entering into the agreement, Ghose discovered that the property was subject to requisition a fact that
was not disclosed by Mugneeram Bangur & Co.

Judgment: The Supreme Court held that Mugneeram Bangur & Co. had misrepresented the status of
the property to Satya Brata Ghose. As per Section 18 of the Indian Contract Act, this constituted
misrepresentation. Consequently, under Section 19, the contract was deemed voidable at the option
of the aggrieved party.

SELF ASSESSMENT QUESTIONS

 SHORT ESSAY
 SHORT ANSWER 1. Analyze the essentials of a valid
1. What is an offer? consideration
2. Explain General offer and Counter 2. What is privity of consideration,
offer? Discuss
3. Who is a party to an offer and 3. Discuss the Different types of
acceptance? offer?
4. Meaning of consideration 4. invitation of offer is not an offer
5. What is Privity of contract? analyse the statement
6. How can we understand a person is 5. how can we revoke it and offer and
minor or not? also explain the ways how can we
7. Name the person who is revoke an offer
disqualified by the law? 6. Discuss how the free consent in a
8. Who is a idiot? contract?
9. Define Coercion? 7. What are the conditions of
10. Define Misrepresentation coercion?
11. What do you mean by Duress?

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 BUSINESS REGULATIONS

8. Analyze what are the types of 13. Evaluate the persons who are
mistake? disqualified by law from entering
9. Discuss the position of what is in to a contract?
mean by contract with a
Pardanashin Woman?  ESSAY
10. Threat to commit Suicide -Does it 1. Critically evaluate Consent in a
amount to coercion, Evaluate? contract is said to be free when it is
11. Who are the persons in a dominant not caused by any actions section
position and who are not in a 15 to Section 22?
dominant position in case of undue 2. Analyze the position of a minors
influence evaluate? Agreement?
12. What is fraud and the Essential 3. Features of a valid consideration?
elements in the concept of a fraud 4. Distinguish between Mistake and
and also explain the concept Misrepresentation
silence amount to fraud or not?

CHAPTER-4
VOID AGREEMENT

Chapter overview

 Void agreement-agreement not enforceable by law

 Wagering agreement –features-exceptions
 Contract of insurance
 Discharge of contract- mode of discharge- Doctrine of Frustration
 Breach of contract

It is an agreement that is not enforceable The following agreements have been

by law from its inception, meaning it has declared to be void by the Contract Act
no legal effect. It is considered invalid and 1872,
neither party can sue to enforce its terms.
It is void ab initio that is void from the 1. Agreements made by incompetent
very beginning parties (Section 11) Agreements
with minors, persons of unsound
Definition mind, etc., are void.
2. Agreements made under mutual
According to Section 2(g) of the Indian
mistake of fact (Section 20) If both
Contract Act, 1872, “a void agreement is
parties are mistaken about a fact
defined as an agreement that is not
essential to the agreement.
enforceable by law”.
3. Unlawful consideration or object
(Section 23) If the consideration or
purpose is illegal or immoral.
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 BUSINESS REGULATIONS

4. Agreements without consideration  There must be an uncertain future

(Section 25) Agreements made event.
without lawful consideration are  There are mutual chances of gain
generally void, unless under certain or loss
exceptions.  Neither party should have any
5. Agreements in restraint of control over the event.
marriage (Section 26) Agreements  Neither party should have any
that restrict someone's right to marry other interest.
are void.  It should be a promise to pay
6. Agreements in restraint of trade money or money’s worth.
(Section 27) Agreements that restrict  The bet money for the uncertain
lawful trade or profession are void event should come out of the
7. Agreements in restraint of legal pockets of the parties of the
proceedings (Section 28) agreement
Agreements that prevent enforcement
of rights through legal action are Exceptions to Wagering Agreements
void.
8. Uncertain agreements (Section 29) Although wagering agreements are void
Agreements where the terms are under Section 30 of the Indian Contract
vague and uncertain are void. Act, some exceptions exist where they are
9. Wagering agreements (Section 30) either valid or treated differently:
Agreements based on bets or wagers
are void. 1. Horse Racing Competitions
10. Agreements to do impossible acts Agreements related to horse racing
(Section 56) Agreements to perform are valid if the prize money is ₹500 or
acts that are impossible are void. more.

Wagering agreement 2. Commercial transactions

Normal agreement for sale and
It is an agreement between two parties purchase of any commodity is not
where the money or money’s worth is wagering but any transaction is done
payable by the one party to the other party with the intention of paying for getting
on the happening of uncertain events and differences in price it is wagering and
the other party to first-party, when the void.
event doesn't take place.
Example: If Noushad and Shafeeq betted 3. Speculative transactions
on the result of a football match to be If both parties intend only to settle by
played between Argentina and Brazil the paying the difference in price without
condition was that the loser was to forfeit actual delivery of goods or shares then
his rupees 5000 and the winner was to it is treated as a wagering agreement
recover this amount. (void). But if at least one party intends
genuine delivery of goods or shares, it
Essentials of wagering agreement is not a wager it becomes a valid
commercial contract.
 There must be two parties.
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 BUSINESS REGULATIONS

4. Skill-based Competitions So, even though legally allowed, it is

If an event depends mainly on skill still a wager in nature.
(not chance), then it is not a wager.
Example: Crossword puzzles, quiz
competitions, chess tournaments these Contract of Insurance
are valid.
A contract of insurance is an
5. Lotteries agreement where one party (the insurer)
In general, the lottery is treated as a promises to compensate the other party
wagering agreement because winning (the insured) for a specific loss, damage,
depends purely on chance, not on skill or liability arising from uncertain events,
or effort. So naturally, lotteries would in exchange for a premium.
also be void under normal contract
law. It is governed mainly by the Insurance
But when a lottery is authorized Act, 1938 and general contract principles
by the government, it is considered under the Indian Contract Act, 1872.
legal but only because of special
permission, not because it stops being Difference between wagering agreement
a wager. and contract of insurance

Wagering Contract of Discharge of contract

Basis
agreement insurance
An It means the determination of a
agreement to contractual relationship between the
An agreement to
win or lose parties when their rights and duties come
protect against
Meaning money based
loss from to an end.
purely on
uncertain events.
uncertain eve
nts. Modes of discharge of contract
Insurable
No real
interest must
interest in the
Interest exist (financial
subject
or beneficial
matter.
interest).
To get
To make a protection and
Purpose
profit or gain compensation
against loss
No duty of Must observe
full utmost good
disclosure faith
Good Faith
(no “good (all material
faith' facts must
required) be disclosed) 1. Discharge by performance
Void under It arises when the parties to the
Section 30 of Valid and contract fulfill their obligations under
Enforceabi
Indian legally
lity the contract within the time and in the
Contract enforceable
Act. 1872 manner prescribed.
Supported and 34
Considered regulated by law
Legality against (like the
public policy Insurance Act, 1
938)
 BUSINESS REGULATIONS

Performance may be: performance, and A's obligation is

 Actual performance discharged.
It is the performance where each 2. Discharge by mutual agreement
party does exactly what they It is dealt under section 62 of the
promised to do under the contract. Indian Contract Act 1872. If the parties
 Attempted performance of a contract mutually agree to end or
When one party offers to perform alter the existing contract before it is
his obligation but the other party fully performed then it is the discharge
refuses to accept the performance. by mutual agreement.
Example: A agrees to deliver 10 bags The following are the methods of
to B. A show up with the bags ready discharging a contract by mutual
for delivery, but B refuses to accept agreement
them. Here, A has made an attempted

Type Meaning Example

Novation Substitution of a new contract in place of X owes Y Rs. 5000. Then X,Y
existing contract between the same parties or and Z mutually agree that Z will
different parties only with mutual consent pay the amount to Y instead of
X.

Alteration Change in one or more of the material terms of a A agrees to service B's laptop
contract within 2 days. However, due to
the unavailability of parts, they
both agree to extend the period
to 5 days

Rescission Canceling of a contract by mutual agreement of A promise B to supply 10kg

the parties involved before the date of Apple, later they mutually agree
performance. to cancel the contract.

Remission Acceptance of lesser performance than what was A borrower owes the bank
contracted for . ₹3,00,000. The bank agrees to
accept ₹285,000 as full and final
settlement. Bank remitted
15,000

Waiver Deliberate abandonment of a right which a party A landlord has the right to evict
is entitled to under a contract. a tenant for late rent, but chooses
to allow the tenant to stay. The
landlord has waived the strict
right to evict.

3. Discharge by lapse of time the contract is automatically

Under the Limitation Act, every discharged.
legal action must be taken within a
specific time period. If a party does not 4. Discharge by impossibility of
enforce their rights within that time, performance

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 BUSINESS REGULATIONS

It means a contract comes to an If a contract that was lawful at the

automatic end when it becomes time of its formation becomes illegal
impossible to perform due to reasons due to a change in law, it becomes
beyond anyone’s control such as impossible to perform.
unforeseen change in law, non- Example: A ltd contracts with B ltd
existence of a particular thing, to sell a specific type of weapon. Later,
declaration of war etc. the government bans the sale of that
weapon by law. Now, the contract
becomes illegal and impossible to
5. Discharge by breach of contract perform because of the change in law.
It occurs when one party fails or
refuses to perform his part of the 4. Declaration of war
contract on the due date. After the declaration of war the
Example: A agrees to sell a bike to B contract with the enemy countries will
but sells it to C instead is a breach by be discharged.
A.
Cases where the doctrine of frustration
supervening impossibility is not
Doctrine of Frustration or supervening applicable
impossibility
A. Difficulty of performance
It means that a contract is discharged
Unexpected difficulty or increasing
when, after it is made, an unforeseen event
expenses are not an excuse from
occurs which makes the performance
performing a contract.
impossible, illegal, or radically different
Example: A domestic company
from what was agreed.
contracted with a foreign company to
deliver 10 bikes.
However, the sudden increase in
Cases where the doctrine of frustration
shipping charges does not allow
supervening impossibility is applicable
the companies to withdraw from
the contract.
1. Destruction of subject matter
If the subject matter of the contract is
B. Commercial impossibility
destroyed without any mistake of the
In a transaction the profit becomes
parties, then the contract is discharged
very crucial or there may be higher
loss then the performance of the
2. Death or personal incapacity of the
contract become commercially
party
impossible, it may arise due to higher
If one of the parties becomes
price of raw material or increasing
incapable of performing the agreed
wage etc
task due to death or physical
incapacity, the contract will be
C. Impossibility due to the default of a
discharged.
third person

3. Change of law
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 BUSINESS REGULATIONS

The doctrine of frustration is not Example: A agrees to join in B’s

applicable where the contract could not company from first June and on 20th
be performed because of the May he writes to B that he will not join
impossibility created by any third the service so this is an anticipatory
person. breach of contract.
Example: A catering company makes a
contract with the client to supply 500 2. Actual breach of contract
laddoos for an event. The catering It is a case of refusal to perform the
company depends on a bakery shop to contract on the scheduled date. Here
make the laddoos but if the battery the other party to the contract has a
shop fails to deliver the laddoos on right to action against the one who has
time then the catering company is still refused to perform the promise.
responsible for the performance. Example: A agrees to deliver 10 bags
of rice to Z on 23rd April 2025, but on
D. Strike and lockout that day, he fails to deliver the rice.
A contract not discharges due to the This amounts to an actual breach of
lock-out by the employer or strike by contract
the workmen.
Remedies for breach of contract
E. Failure of one of the object
The contract is not discharged if one of ● Rescission of the contract
the objects fails, in case the contract is ● Suit for damages
for several objects. ● Suit upon Quantum meruit
● Suit for specific performance of the
Breach of contract contract
● Suit for injunction
It means breaking of the obligation
which a contract imposes.
It is the failure of a party to perform his
I. Rescission of the contract
or her obligation under a contract. The
breach of contract arises in the following When a contract is broken by one
ways: party, the other party may rescind the
contract and need not perform his part
1. Anticipatory breach of contract of obligation under the contract.
2. Actual breach of contract Example: A contract to supply 10
kilograms of cardamom for rupees
1. Anticipatory breach of contract 25000 to B on 23rd April. If A does
not supply the cardamom on the
It is also known as constructive breach
scheduled day B need not to pay the
of contract. When a party refuses to
price.
perform his liability or obligation
before the time for performance has
II. Suit for damages
arrived is called anticipatory breach.
Here he informed his unwillingness Damages are the monetary
before the time of performance. compensation allowed to the injured
party for the loss or injury suffered
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 BUSINESS REGULATIONS

by him as the result of breach of 2. Special damages

contract. When a contract is broken These are the damages which
the injured party can claim for arise on account of the special or
damages against the other party. unusual circumstances and they are
such remote losses which are not
 Rules regarding the damages
natural.
● The injured party is entitled in the Example: S sent some specimens
same position as if the contract had of his goods for exhibition at an
been performed. agricultural dhow. After the show
● Damages naturally arise in the he entrusted some of his samples to
usual course of things from such an agent of a railway company for
breach can be recovered. carriage to another show ground at
● Law does not award damages New castle.
which are either too indirect or too On the consignment note he
remote. wrote “must be New castle
● Compensation for the quasi Monday certain”. Owing to a
contract as damage in same for the default on the part of the railway
contract company, the samples arrived late
for the shop. Held, S could claim
 Kinds of damages damages for the loss of profit at the
show
1. General or ordinary or
3. Exemplary or punitive or
compensatory damages
2. Special damages vindictive damages
3. Exemplary or punitive or Exemplary, punitive, and
vindictive damages vindictive damages are basically
4. Nominal damages different names for the same
concept damages awarded not to
1. General or ordinary or compensate the victim, but to
compensatory damages punish the wrongdoer and deter
others from doing the same.
It is the damage arising naturally
and directly in the usual course of
Example: A driver is drunk, speeds
things from the breach of contract
through a red light, and crashes
itself. It may be the direct lose
into another car. The victim gets
suffered from the breach of
compensatory damages (for
contract.
injuries, car repair, etc.).
Example: X contracted to sell
The drunk driver is also
and deliver 50 quintals of rice to Y
ordered to pay punitive damages
at rupees 775 per kilo but the price
because they acted recklessly and
of rice rises to rupees 800 per
endangered their lives.
quintals and A refuses to sell the
rice. B can claim damages at the
4. Nominal damages
rate of Rs 25 per quintal.

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 BUSINESS REGULATIONS

Is a damage to recognize the right When a person does some act to

of the party to claim damages for another person with an intention of
the breach of the contract, here receiving payment then the other
only technical violation of legal person is bound to make payment
right but no substantial or financial if he accepts such service.
losses.  When a contract is divisible
Example: You hire a singer to When contract is divisible and a
perform at your party. They cancel part of the contract is performed
at the last minute, but you can and the remaining part is refuses to
easily find a better singer at the perform in such a case the party in
same price. default may sue the other party
You sue for breach of contract. who has enjoyed the benefit of the
Since you didn’t suffer any part performance
financial loss, the court awards
nominal damages.

III. Suit Upon Quantum Meruit IV. Suit for specific performance
In some cases damages are not a
The term ‘Quantum Meruit’ means remedy for the breach of contract so
‘as much as earned’ or ‘in proportion the court directs the defaulting party
to the work done’. When a person has to carry out the performance of the
began the work and before he could contract specifically.
complete it the contract terminated by The court at their discretion order
the other party then he can claim for specific performance in the following
the work done under the contract. cases:
Example: A freelancer agrees to  Where compensation in money
design your full website for ₹1 lakh. would not afford adequate relief
After doing 40% of the work, you  Where there is no standard for
decide to cancel the project. ascertaining the actual damages
The freelancer can sue to recover  When it is probable that monetary
payment for the work already consideration on non performance of
delivered (40%). the acting cannot be obtained

 Claim for quantum meruit V. Suit for injunction

 When an agreement is discovered to When someone files a case asking
be void the court to stop another person from
Where the work has been done and doing something (or force them to do
accepted under a contract but later something) to protect their rights.
discovered to be void in such case
Injunction = Order of the court to
the person who performed the part
restrain or compel an action.
of the contract is entitled to recover
the amount for the work done. Example: Mr. X, a film star, agreed to act
 When something is done without any exclusively for a particular producer for
intention to do so gratuitously one year. During the year he contracted to

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 BUSINESS REGULATIONS

act for some other producer. He could be

restrained by an injunction.
CASE STUDIES

1. Mohori Bibee v. Dharmodas Ghose (1903) 30 Cal 539 (PC)

Topic: Agreements with minors (Void Agreements)

Facts: A minor mortgaged property and later refused repayment claiming minority. Is the agreement
valid?
Decision: The Privy Council ruled that a minor's agreement is absolutely void, and not merely
voidable.
Relevance: Fundamental case establishing that minors cannot contract, hence the agreement was
void ab initio.

2. Gherulal Parakh v. Mahadeodas Maiya (AIR 1959 SC 781)

Topic: Wagering Agreements

Facts: Parties entered into a partnership for speculative share trading. One partner sued for a share in
profits. Was the agreement void under Section 30 of the Contract Act?
Decision: The Supreme Court held that speculative transactions can include wagering agreements,
and these are void but not illegal, unless expressly prohibited.
Relevance: Clarifies when speculative business turns into wagering, and void vs. illegal distinction.

3. Krell v. Henry (1903) 2 KB 740

Topic: Frustration of Contract

Facts: A room was rented to watch the coronation procession. The event was cancelled. Was the
contract frustrated?
Decision: Yes. The foundation of the contract was the procession, which never happened.
Relevance: Widely cited case in Indian law for frustration due to non-occurrence of underlying
purpose.

4. Hadley v. Baxendale (1854) 9 Exch 341

Topic: Remedies for Breach – Damages

Facts: A mill was shut due to a broken shaft. The delivery of a replacement was delayed. Can the
plaintiff claim loss of profits?
Decision: Only natural and foreseeable losses can be claimed, not remote damages.
Relevance: Forms the basis for determining damages in breach of contract in India too (Section 40
73
of Indian Contract Act).
 BUSINESS REGULATIONS

5. Hoenig v. Isaacs (1952) 2 All ER 176

Topic: Quantum Meruit

Facts: A decorator completed most of the work but was not paid the full amount due to minor
defects. Could the contractor claim partial payment?
Decision: Yes, under Quantum Meruit, he was entitled to the value of work done.
Relevance: Supports claim under Section 70 of Indian Contract Act for incomplete but valuable
performance.

SELF ASSESSMENT QUESTIONS 1. Describe breach of contract and its

types?
 SHORT ANSWER 2. Explain the remedies available for
breach of contract
1. Define a void agreement under the 3. Discuss how Quantum Meruit
Indian Contract Act. helps in partial contract
2. Mention any three agreements that completion scenarios.
have been declared void by the 4. Compare wagering agreement and
Contract Act, 1872. contract of insurance
3. What is the discharge of a contract 5. Examine the essentials of a
by lapse of time? wagering agreement.
4. Explain with an example, an 6. Explain how a contract is
agreement made without discharged by mutual agreement,
consideration. using real-life examples.
5. Define frustration of contract in 7. Examine how anticipatory breach
simple terms. differs from actual breach with
6. What is a wagering agreement? examples.
7. How lotteries are treated in
contract?  ESSAY
8. X agrees to sell Y his car for Rs.
100000 or Rs. 200000. Is this 1. Evaluate the relevance of void
valid? Why? agreements in today's business
9. How can a contract be discharged? environment.
10. What is an injunction? 2. Explain the exceptions and effects
of a wagering agreement
 SHORT ESSAY 3. “All agreements in restraint of
trade are void” explain.

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 BUSINESS REGULATIONS

4. Develop a flowchart showing

different modes of discharge of
contract with suitable examples.
5. Evaluate the situations where
Cases where the doctrine of
frustration supervening
impossibility is applicable and not
applicable
6. What is quantum meruit? Under
what circumstances a claim on
quantum meruit arises.

CHAPTER-5

CONTINGENT AND QUASI CONTRACT

Chapter overview
 Contingent contract - characteristics - rules regarding performance of
contingent contract- Difference between wagering agreement and contingent
contract
 Quasi contract - definition - features - types - difference between contract and
quasi contract.

Contingent contract
Section 31 of the Contract Act defines Rules regarding performance of
contingent contract as “a contract to do contingent contract
or not to do something if some event According to section 32 to 36 of the
collateral to such contract, does or does Contract Act the following are the rules
not happen”. Insurance contract is the best regarding performance of contingent to
example contract
1) It is dependent on the happening of
Characteristics of contingent contract an uncertain future event section 32
 It is depends on a future event A contingent contract is made on
 The event is uncertain the basis of a future uncertain
 The uncertain event is collateral to event; it cannot be enforced by law
the contract until that event has happened.
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 BUSINESS REGULATIONS

happened or when time fixed has

2) Contract contingent on the non- not expired.
happening of an event (Section 33)
When it depends specifically on Difference between wagering agreement
the non-happening of an event, it and contingent contract
means that the contract will be
enforced only if that uncertain Wagering Contingent
event does not occur. Agreement Contract
Example: A agrees to pay B
₹50,000 if a ship does not return. If
the ship does not return, the Based purely on Based on a real
chance interest
contract becomes enforceable.
Genuine interest in
No genuine
3) Contingent agreements depend on event
interest in event
the happening of an impossible event
If a contingent agreement depends
Void and Valid and
on the happening of an impossible unenforceable in enforceable
event, it is void from the India
beginning. Since the event can
never happen, the contract can Aim is winning
Aim is fulfillment
or losing money
never be enforced. of a contract
Example: A agrees to pay B if B
can make a dead person alive. Example: Example:
Since it is impossible, the Betting on Insurance contract
agreement is void. cricket match

4) Contingent contract depend on

happening of a specified uncertain Quasi contract
event within a fixed time A quasi contract is a situation where the
A contingent contract which is law creates a duty between two people
made of a specified uncertain event even though they never agreed to it, just to
within a fixed time becomes void make things fair.
when the specified event does not
happen within the fixed time. Example: Suppose A mistakenly delivers
a package to B. Even though B never
5) Contingent contract depend on asked for it, B must either return the
"non-happening" of a specified package or pay A because it would be
uncertain event within a fixed time unfair for B to keep it without paying.
A contract contingent on a
specified and certain event not Definition:
happening within a fixed time may
be enforced when time fixed has A quasi contract is "An obligation
expired and event has not imposed by law, even without any
agreement, to ensure fairness and justice
between the parties.”
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 BUSINESS REGULATIONS

Features of quasi contract 3. Obligation to pay for the benefit

enjoyed from non-gratuitous Act
 It is an obligation imposed by law. (section 70)
 It does not arise from any If someone performs an act for
agreement. another person without a formal
 A person must compensate if they agreement and the other person
unfairly benefit from someone else. benefits, the beneficiary must
 Courts impose this duty even if the compensate the person who performed
parties never intended to create a the act.
contract. Example: A delivers a box of goods
 The injured party is eligible to by mistake to B’s house instead of C’s.
receive compensation from the B uses the goods. Since B accepted
party in default and enjoyed the benefit, B must pay A.

4. Responsibility of finder of goods

Types of Quasi Contract (section 71)
1. Claims for necessaries supplied A person who finds goods belonging
(section 68) to another and takes them into his
If a person who is incapable of custody is subject to the same
contracting (like a minor or a mentally responsibility as bailee. He should take
ill person) is supplied with necessary serious efforts in finding out the real
goods or services, the supplier can owner and should return it.
claim payment from their property.

Example: A supplies food and Example: A finds B’s wallet on the

medicine to a mentally ill person (B) street. A has an obligation to return the
who cannot make contracts. A can wallet to B, or if A cannot return it, A
claim the cost from B's property, as must compensate B for the loss.
these are necessary goods. 5. Money paid or things delivered by
mistake or under coercion (section
2. Reimbursement of payment made by 72)
an interested person (section 69) If someone pays money to another
A person, who is interested in the person by mistake or under coercion,
payment of money which another is they have the right to claim a refund.
bound by law to pay, and who Example: An accidentally pays to B's
therefore pays it, is entitled to be account instead of his own (wrong
reimbursed by the other. account number).A can ask B to refund
Example: A pays B’s electricity bill the amount.
when B is absent. A can recover the
amount from B as A acted in B’s Difference between Contract and Quasi
interest. contract

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 BUSINESS REGULATIONS

Contract Quasi contract

There is no
It is an agreement
agreement

It has certain There is no such

essential elements elements

It is full -fledged
It is an implied
contract and is
contract
binding

It is to fulfill
To prevent unfair
promise made by
gain
parties
CASE STUDIES

1. Narendra Kumar v. Karam Chand Thapar & Bros.Citation: AIR 1969 Cal 157
Title: Contingent contract and impossibility of event
Facts: Payment was promised if a third party approved certain construction work. The third party
refused approval.
Decision: Since the approval was the basis of the contract, and it did not occur, the contract becomes
void.
Key Point: If the condition for a contingent contract becomes impossible, the contract becomes void
under Section 32.

2. State of West Bengal v. B.K. Mondal & Sons (AIR 1962 SC 779)
Title: Quasi Contract
Concept: Non-gratuitous act (Section 70)
Facts: Contractor did work for the government without formal contract. The Government used the
benefit.
Decision: Government was bound to compensate, even without formal agreement.

Principle: One who enjoys the benefit of another’s lawful act must pay.

SELF ASSESSMENT QUESTIONS 6. Identity the characteristics of

contingent contract
 SHORT ANSWER
1. Define contingent contract  SHORT ESSAY
2. Describe quasi contract 1. Quasi contract is an obligation
3. List out types of quasi contract imposed by law - why
4. How does quasi contract come 2. Compare quasi contract with
into existence? contract
5. State the responsibility of 3. Bring out the difference
finder of goods between wagering agreement
and contingent contract
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 BUSINESS REGULATIONS

 ESSAY
1. Explain the rules regarding
performance of contingent
contract
2. State briefly the types of quasi
contract with examples

CHAPTER-6

CONTRACT OF INDEMNITY

Chapter Overview

 Contract of indemnity-Parties to contract of indemnity-Features

 Rights of indemnity Holder
 Rights of Indemnifier

It is a special type of contract. any other person, is called a contract of

indemnity."
According to Section 124 of the Indian
Contract Act, 1872, "Contract of STAR Ltd. insures its warehouse with
Indemnity" is defined as: "A contract, by MOON Insurance Co. against fire damage.
which one party promises to save the other If a fire breaks out and causes a loss of
from loss caused to him by the conduct of ₹10 lakh, MOON Insurance will
the promisor himself, or by the conduct of compensate STAR Ltd. for the loss.

Parties in a Contract of Indemnity

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 BUSINESS REGULATIONS

1. Indemnifier If the person protected by the contract

 This is the person who gives the (called the “indemnified”) suffers a
promise. loss, the other person (called the
 He promises to compensate the “indemnifier”) has to cover or repay
other party for any loss or damage. that loss.
 Finally t, the indemnifier is the one
who takes responsibility for the
loss. 3. Essentials of a Valid Contract

2. Indemnified / Indemnity Holder Like all other contracts, a contract

 This is the person who gets the of indemnity must follow the basic
protection. rules of a valid contract.
 He is the one who can recover the
loss From the indemnifier.
 The indemnity holder is the one Rights of the Indemnity Holder
who is covered by the promise. (Indemnified Party)

Section 125 of the Indian Contract Act,

Features of Contract of indemnity 1872
1. Express or Implied Section 125 lays down the rights available
to the indemnity holder when acting within
Express indemnity means the
the scope of their authority under the
agreement is clearly written or spoken.
contract of indemnity.
For example, a contract that says, “I
will pay you for any loss you suffer 1. Right to Recover Damages
because of this deal.”
The indemnity holder can recover all
Implied indemnity happens through damages which they may be compelled
actions or circumstances, even if to pay in any suit in respect of any
nothing is written. For example, if matter to which the contract of
someone acts on your behalf and indemnity applies.
suffers a loss because of it, the law
may assume you promised to cover 2. Right to Recover Costs
that loss.
They are entitled to recover all costs
incurred in defending or instituting a
suit, provided. The suit was related to a
2. Compensation for Loss matter covered by the indemnity, and
they acted prudently or with the
The main purpose of an indemnity
authority of the indemnifier.
contract is to compensate for losses.
3. Right to Recover Sums Paid under
Compromise

The indemnity holder can recover all

sums which they may have paid under
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 BUSINESS REGULATIONS

the terms of any compromise of such The indemnifier is entitled to all the
suit. benefits of securities and equitable rights
held by the indemnity holder against third
Rights of Indemnifier parties. This ensures fairness and prevents
According to Section 141, Indian contract unjust enrichment of the indemnity holder.
act the indemnifier compensates the 3. Right to Refuse Indemnity
indemnity holder for a loss; he gains
certain rights as follows: The indemnifier has the right to refuse
compensation if the loss suffered by the
1. Right to Subrogation indemnity holder is outside the scope of
Once the indemnifier has paid for the loss, the indemnity contract, or if the indemnity
he steps into the shoes of the indemnity holder acted beyond the authority or
holder and gains all the rights and contrary to the terms of the contract.
remedies that the indemnity holder had
against the third party. This includes rights
over any securities or claims.

2. Right to Equities

CASE STUDIES

1) Gajanan Moreshwar v. Moreshwar Madan (1942)

CASE: The plaintiff had given security for the defendant's loan. When the creditor enforced the
security, the plaintiff sought indemnity from the defendant.

Judgment: Justice M.C. Chagla held that the Indian Contract Act is not exhaustive on indemnity and
courts can draw from English law. He emphasized that indemnity includes protection from liability,
not just actual loss.

2) Adamson v. Jarvis (1827) 4 Bing. 66

CASE: Jarvis (defendant) asked Adamson (plaintiff, an auctioneer) to sell some cattle at an auction.
Adamson sold the cattle as instructed, but later it turned out that Jarvis did not own the cattle. In
fact, the cattle belonged to someone else. The true owner of the cattle sued Adamson for selling
property that wasn’t his to sell. Adamson, having been sued, claimed Jarvis should compensate him
(indemnify him) because he had acted in good faith based on Jarvis’s instructions. Adamson sued
Jarvis to recover the amount he lost because of Jarvis’s actions.

Judgment: The court held that Jarvis must indemnify Adamson because Adamson had suffered a48
loss due to following Jarvis’s instructions. Since Adamson was acting on Jarvis’s behalf, Jarvis was
obligated to protect him from any resulting liability or loss.
 BUSINESS REGULATIONS

SELF ASSESSMENT QUESTION

A. SHORT ANSWER C. ESSAY
1. Discuss what is indemnity? 1. What is contract of indemnity
2. Who is an indemnity holder? and what are the rights of
3. Who is an indemnifier? Indemnity holder and
4. Discuss the importance of indemnifier?
Subrogation

B. SHORT ESSAY
1. Features of contract of
indemnity?
2. Insurance is a contract of
indemnity-Discuss?

CHAPTER-7

CONTRACT OF GUARANTEE

Chapter overview

 Contract of guarantee-parties-features
 Liability of surety -Rights of surety
 Discharge of contract of guarantee

It is Special type of contract. It aims guarantee is a contract to perform the

to give a protection to individuals to obtain promise, or discharge the liability, of a
Loan, employment, goods and service etc. third person in case of their default".

Section 126 of Indian contract act defines Principal Surety Creditor

Contract of Guarantee "A contract of Debtor
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 BUSINESS REGULATIONS

The person The person The person The Surety gives the guarantee only at
who iswho gives to whom the the request of the Debtor.
primarily the guarantee is
liable to guarantee; given. F. Surety’s Liability
perform the i.e., the one
obligation or who The Surety is responsible to pay if the
repay the promises to Debtor fails to pay.
debt. discharge
the liability
if the
principal G. Consideration
debtor fails.
Example: Rohit wants to take a loan of There must be something of value
₹50,000 from a bank, but the bank needs exchanged. The benefit received by the
someone to guarantee that Rohit will repay Debtor is enough.
it
Rohit is the Virat is the Bank is the H. Free Consent
Principal Surety Creditor
Debtor All three must give their consent freely
that is no force, no fraud, or no
pressure is involved in obtaining the
Features of a Contract of Guarantee consent of parties to contract.

A. Three Parties Involved I. Writing Not Mandatory

There are three main people: A Contract of Guarantee can be oral or

written writing is not compulsory.
 Principal Debtor: The one who
takes the loan or owes money. J. All Contract Essentials Present
 Creditor: The one who gives the
loan or money. Like any contract, it must have offer,
 Surety: The one who promises to acceptance, legal object, free consent,
pay if the debtor fails. consideration, etc.
B. Three Contracts Exist
Liability of Surety – Section 128
 Between the Debtor and Creditor
 Between the Surety and Creditor  Surety’s Liability Starts Immediately
 Between the Surety and Debtor from the moment when the Principal
Debtor fails to pay, the Surety
C. Competent Parties becomes liable to pay the debt.

All three people must be legally

 The Surety is liable to pay the same
capable of making a contract (i.e., not
amount as the Principal Debtor unless
minors, of sound mind, etc.).
there’s a special agreement saying
D. Mutual Agreement otherwise.

All three should agree and have a clear  Even if the Debtor is discharged by
understanding of the guarantee. law (e.g., becomes insolvent), the
Surety still has to pay the debt.
E. Request by Debtor
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If the creditor sues the surety for

 No Liability in Case of Fraud or repayment, the surety can claim any
Misrepresentation that is If the creditor set-off or counterclaim that the
uses fraud or hides facts while forming principal debtor had against the
the contract, then the Surety is not creditor.
liable.
Example: If the principal debtor was
owed some money by the creditor, the
surety can use that amount to reduce his
Rights of Surety liability.

A. Right Against the principal Debtor 3. Right to Subrogation

After the surety pays the debt, he

1. Right of Subrogation
steps into the shoes of the creditor. This
When the surety pays the guaranteed means he can exercise all the rights the
debt, he gets the rights of the creditor. creditor had, including suing the
He can take legal action against the principal debtor or claiming securities.
principal debtor to recover the amount
C. Right against the Co-surety
paid.

2. Right to Indemnity 1. Right to Claim Contribution

The surety has the right to be If one co-surety pays more than their
compensated by the principal debtor. fair share of the debt (or the entire
He can recover all amounts that he has amount), they have the right to claim
rightfully paid under the guarantee. contribution from the other co-sureties.
The liability is typically divided
B. Right Against the creditor equally, unless otherwise agreed or
specified, to ensure that no single co-
1. Right to Securities (Section 141) surety bears the full burden.
If the creditor has any securities (like 2. Release of Co-surety
pledged goods, property, etc.) from the
principal debtor at the time of the Once the obligations under the
contract of guarantee, the surety is guarantee are fulfilled or if the principal
entitled to those. Even if the surety was debtor is released, the co-surety is
unaware of those securities, he still has discharged from their responsibilities.
the right to claim them after paying the The release of one co-surety does not
debt. automatically release others, unless the
terms of the agreement dictate so.
If the creditor loses or releases the
securities without the surety’s consent, 3. Right to Share the Benefit
the surety is discharged to that extent.
If any co-surety receives a benefit
2. Right to Set-off (or Set of Claims) (e.g., through security, repayment, or
recovery from the debtor), all co-

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sureties are entitled to share that benefit is discharged from the original
equally, in proportion to their liability. guarantee.

B. Discharge by the Conduct of the

Discharge of surety from liability Creditor

A. Discharge by Revocation 1. If the creditor changes the original

1. By Notice: The surety can cancel agreement without the surety’s
their guarantee for future permission. If the creditor releases
transactions by giving a written the principal debtor (main
notice to the creditor. borrower) from their obligation.

2. If the creditor acts in a way that

harms the surety’s rights or makes
it harder for the surety to recover
their money.

C. Discharge by Invalidation of the

Contract of Guarantee

1. Misrepresentation or Concealment:
If the guarantee was obtained by
lying or hiding important facts, the
surety can refuse to be bound.
2. Co-surety Not Joining: If the
contract said that multiple sureties
must sign, but some didn't, then the
surety can walk away.
3. Failure of Consideration: If the
creditor promised something in
2. By Death: When a surety dies, their return but did not actually give it,
guarantee automatically ends for the surety is free from the contract.
future transactions (but still applies
to past transactions). 4. Lack of Essential Elements: If the
guarantee contract is missing
3. By Novation: If a new contract something important (like consent,
replaces the old one (with the lawful object, or consideration), the
agreement of all parties), the surety surety can step away.

CASE STUDIES
1) Bank of Bihar Ltd. v. Damodar Prasad & another (1969 AIR 297, SC)

A borrower took a loan from the Bank of Bihar. Damodar Prasad signed as a guarantor, meaning he
52
promised to pay if the borrower failed. The borrower defaulted (failed to repay).The bank directly
sued Damodar Prasad, the guarantor. Damodar Prasad argued, "First, sue the borrower. Only if he
doesn't pay, come to me."
 BUSINESS REGULATIONS

2) Punjab National Bank v. Sri Vikram Cotton Mills Ltd. (1970 AIR 1973, SC)

Punjab National Bank gave credit to Sri Vikram Cotton Mills. A third party gave a guarantee for
repayment. Later, Sri Vikram Cotton Mills went into liquidation (a process like bankruptcy).The
bank directly demanded payment from the guarantor.

Judgment: Even if the principal debtor goes into liquidation, the guarantor still has to pay. The
guarantee is an independent contract, and the creditor can enforce it directly.

3) State Bank of India v. Premco Saw Mill (1983 AIR 1440, SC)

A creditor can proceed directly against the surety without initiating any action against the principal
debtor.

SBI gave a loan to Premco Saw Mill. A third party signed as a guarantor (surety).The borrower
defaulted. The bank sued only the guarantor, not the borrower. The surety said the bank should have
first sued the borrower.

Judgment by Supreme Court: The surety cannot demand that the creditor must first sue the principal
debtor. The creditor has the right to recover directly from the surety.

The surety's obligation is independent and immediate.

SELF ASSESSMENT QUESTION 1) What are the key features that make
up the essential elements of a
contract of guarantee?
 SHORT ANSWER 2) What role do the parties involved in
1) How would you define a Contract a contract of guarantee play?
of Guarantee? 3) What are the various types of
2) What exactly is meant by a guarantees that exist?
Continuing Guarantee? 4) How can a guarantee be revoked or
3) What function does the surety terminated?
perform in a Contract of Guarantee? 5) What is the significance of the
4) Who qualifies as a surety in a surety's role in a guarantee contract?
guarantee contract? 6) What factors should be considered
5) Can you provide an example of a before agreeing to become a surety?
surety in a real-life scenario?

 SHORT ESSAY

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 ESSAY
1) How would you define a contract of
guarantee, and what is its
significance in today’s business
environment?
2) What are the rights and obligations
of the surety, the debtor, and the
creditor in a contract of guarantee?
3) What methods can be used to
revoke a contract of guarantee?
Could you provide hypothetical
examples to explain these methods?

CHAPTER-8
CONTRACT OF BAILMENT AND PLEDGE

Chapter overview

 Contract of bailment-Features of bailment- classification-Duties-Rights- Lien

 Pledge-Features- Rights and duties

Bailment and Pledge are special types of another for a specific purpose, under the
contracts covered under Sections 148 to condition that the goods will be returned
181 of the Indian Contract Act, 1872. once the purpose is fulfilled, either in the
same form or as agreed.
Bailment refers to the delivery of goods
or movable property by one person to
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 BUSINESS REGULATIONS

In most cases, consideration is also out by the bailee. The purpose should
involved in such arrangements. be clearly stated or implied. Once the
purpose is fulfilled, the contract comes
to an end.
Section 148 – "Bailment" Defined a
"Bailment" is the delivery of goods by one 3. Consideration
person to another for some purpose, upon Consideration is an essential element
a contract that they shall, when the in a Contract of Bailment. For a valid
purpose is accomplished, be returned or contract of bailment, there must either
otherwise disposed of according to the be a reward (remuneration) or an
directions of the person delivering them.” agreement for mutual benefit.
 The person who delivers the goods is This could be a paid bailment (where
called the "bailor". the bailee is compensated for taking
 The person to whom the goods are care of the goods) or a gratuitous
delivered is called the "bailee". bailment (where the bailee is
not compensated).
Example: Rohit gives his laptop to virat a 4. Valid Contract
technician, for repair. Rohit tells virat to
return the laptop after fixing it. In this A valid contract must exist for a
case: bailment agreement. This means that
there must be mutual consent,
consideration, and both parties must
 Rohit is the bailor (he is giving the have the capacity to contract. A
laptop), bailment agreement can be express (in
 Virat is the bailee (he is receiving it writing or spoken) or implied (formed
for a purpose). based on conduct or circumstances).

This is a contract of bailment because the 5. Return of the Same Goods

laptop is given for a specific purpose and After completing the specific
must be returned after that. purpose for which the goods were
Features of Bailment delivered, the bailee must return the
same goods to the bailor (or dispose of
1. Delivery of Goods them as directed by the bailor).
Importantly, the bailee must return the
In a Contract of Bailment, the bailor
identical goods, not goods of a
(the person who owns the goods)
different kind or quality.
delivers the goods to the bailee (the
person who receives the goods) for a 6. Ownership
specific purpose.
In a Contract of Bailment, ownership
2. Specific Purpose of the goods does not transfer. Only
the possession of the goods is handed
The goods are delivered for a over from the bailor to the bailee for a
specific purpose that must be carried
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 BUSINESS REGULATIONS

specified time or purpose. The bailor Example: Giving clothes to a dry

retains ownership throughout the cleaner for a fee.
bailment.

7. Movable Goods
B. Based on Benefit Received
A Contract of Bailment applies only
to movable goods. It cannot apply to 1. Bailment for the Exclusive
immovable property such as land or Benefit of the Bailor
buildings. Only tangible, movable  Only the bailor benefits.
items can be subject to bailment.
Example: Asking someone to keep
your bag safely while you go out.

Classification of Bailment Contracts 2. Bailment for the Exclusive

Benefit of the Bailee
 Only the bailee benefits.

Example: Lending your bike to a

friend for his use, free of charge.

3. Bailment for Mutual Benefit of

Both
 Both bailor and bailee gain.
 Usually a commercial
arrangement.

Example: Giving goods to a

transporter for delivery.

Duties of Bailor
A. Based on Reward (Consideration)
1. Duty to disclose faults in the goods
(Section 150):
1. Gratuitous Bailment
 No consideration involved. The bailor must tell the bailee (the
 Done as a favor or out of person receiving the goods) about
friendship. any known defects or problems in
the goods. If not, and the bailee
Example: Lending your friend a
suffers damage, the bailor is
book for free.
responsible.
2. Non-Gratuitous Bailment
2. Duty to bear expenses (Section 158):
 Consideration (payment) is
involved. The bailor must pay for the
 It's a regular bailment contract. reasonable expenses the bailee
incurs while taking care of the
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 BUSINESS REGULATIONS

goods especially in a situation If the bailee uses the goods

where the bailee is not getting paid wrongly or without permission, the
(called gratuitous bailment). bailor can ask for payment for any
damage.
3. Duty to indemnify for lack of title
(Section 164): 3. Right to End the Bailment (Section
153)
If the bailor didn’t have the right to
give the goods in the first place and If the bailee breaks the agreement,
the bailee faces legal trouble the bailor can stop the bailment
because of it, the bailor must make right away.
up for the loss.

4. Duty to indemnify for excess

bailment (Section 159): 4. Right to Claim Damages (Sections
160 & 161)
If the bailor asks the bailee to keep
the goods longer or do more than If the bailee doesn’t take care of
agreed, the bailor must cover any the goods or returns them late, the
losses the bailee suffers because of bailor can ask for money for any
this. loss.

5. Duty to bear normal risks: 5. Right to Get Profits from Goods

The bailor must take responsibility If the goods make money (like rent
for natural wear and tear or any or interest) and there’s no deal
regular risk involved unless there is saying otherwise, the bailor can ask
an agreement that says otherwise. for it.

6. Duty to receive back the goods: 6. Right to Sue for Loss or Misuse

When the bailment ends, the bailor If the goods are lost or misused
must take the goods back. The because of the bailee’s
bailee isn’t supposed to keep carelessness, the bailor
the goods forever. can go to court.

Rights of Bailor Duties of a Bailee

1. Right to Get Goods Back 1. Duty to Take Reasonable Care

(Section 151):
The bailor has the right to take
goods back after the purpose is The Bailee must take reasonable care
finished. of the goods delivered by the Bailor.

2. Right to Compensation for 2. No Unauthorized Use:

Unauthorized Use – (Section 154)

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 BUSINESS REGULATIONS

The Bailee must not use the goods for If the Bailee spends money while
any purpose other than what was taking care of the goods, they can ask
agreed with the Bailor. the Bailor to reimburse the expenses.

3. No Mixing of Goods: 5. Right to Recover for Loss from

Defective Title:
The Bailee must not mix the Bailor’s
goods with their own goods without If the Bailor does not have a proper
permission. title and the Bailee suffers a loss
because of it, the Bailee can recover
4. No Adverse Claim: damages.
The Bailee must not claim ownership 6. Right to Sue for Title:
or deny the Bailor’s ownership of the
goods. The Bailee can file a suit to settle
disputes about the ownership (title) of
5. Duty to Return Accretion: the goods.
If any profit or addition comes from 7. Right of Particular Lien:
the goods, the Bailee must hand it over
to the Bailor. The Bailee can keep (retain) the goods
until they receive payment for services
6. Duty to Return Goods (Section 160): related to those goods.
Once the purpose is completed, the 8. Right of General Lien:
Bailee must return the goods to the
Bailor promptly. In some cases, the Bailee can keep any
goods in their possession until all dues
Rights of a Bailee from the Bailor are paid.
1. Enforcement of Rights:

The Bailee can enforce the duties of Lien

the Bailor if needed.
Lien means the legal right to keep
2. Delivery to Joint Bailors: someone else’s property until they pay a
The Bailee can deliver the goods to debt or fulfill a promise.
any one of the joint Bailors. In bailment (when one person gives goods
3. Right to Claim Damages: to another for safekeeping or work), the
Bailee (the person holding the goods) can
If the Bailee suffers any loss due to the keep the goods until they get paid.
goods delivered, they have the right to
claim damages.  Lien gives the right to retain goods,
not to use them.
4. Right to Be Indemnified for  Lien is a personal right and cannot
Expenses: be transferred.
 Possession of goods is essential for
claiming a lien.
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 BUSINESS REGULATIONS

 Possession must be lawful, not Example: A bank can keep items in a safe
obtained by coercion or fraud. deposit box if the customer
 Lien arises only when there are has unpaid loans.
unsatisfied claims related to the
goods.
 Lien is a right of defense, not a
right to sue.

There are two types of liens:

 Particular Lien(section 170)

 The Bailee can hold specific

goods they have worked on
until they are paid for that
work.
 The Bailee must have the
goods.
 They must have done PLEDGE OR PAWN
something like repair or
improve those goods. Section 172 defines "Pledge is the
 The lien is only for those bailment of goods as security for payment
specific goods, not others. of a debt or performance of a promise."

Example: A mechanic repairs a car and  The person who delivers the goods
keeps it until the customer pays the repair is called the Pawnor.
bill.  The person to whom the goods are
delivered is called the Pawnee.
 General Lien( Section 171)
Features
 The Bailee can hold any goods
1. Delivery of Goods: In a pledge, goods
they have from the Bailor until all
are delivered to the creditor as
debts are paid, not just debts
security.
related to specific goods.
2. Purpose of Security: The goods are
 Common for: Banks, warehouses,
given to secure payment of a debt or
carriers, etc.
performance of a promise.
Conditions: 3. Transfer of Possession: Only
possession is transferred, not
 The Bailee must have possession ownership.
of the goods. 4. Return of Goods: After the debt is
 It applies to all goods held, not just paid or the promise is fulfilled, goods
those connected to a specific must be returned to the pledgor.
service. 5. Movable Goods Only: Only movable
goods can be pledged (not immovable
property).

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 BUSINESS REGULATIONS

6. Existing Goods: Only goods that The finder must not mix the goods with
already exist can be pledged; future or his own; if he does and the goods are
contingent goods cannot. damaged or lost, he may be held liable.

Finder of Lost Goods 4. Return to True Owner

A Finder of Lost Goods is a person who The finder must try to locate the true
finds goods belonging to someone else and owner and return the goods when found.
takes them into his custody.
Rights of the Finder
Though not the owner, the finder
1. Lien for Expenses (Right to Retain)
becomes a bailee under the law and has
certain rights and responsibilities. Under Section 168, the finder may retain
the goods until he receives compensation
Section 71 of the Indian Contract Act, for any money spent in preserving the
1872 "a person who finds goods belonging goods or finding the owner.
to another and takes them into his custody
is subject to the same responsibility as a 2. Right to Sue for Reward
bailee."
If the owner had offered a reward for the
Duties of the Finder (Like a Bailee) return of the lost goods, the finder can
claim and sue for it.
1. Reasonable Care
3. Right to Sell (Section 169)
The finder must take the same care of the
goods as a prudent person would take of The finder can sell the goods in the
their own property. following situations

2. No Unauthorized Use  If the owner cannot be found with

reasonable effort, or
The finder cannot use the goods for  If the owner refuses to pay lawful
personal benefit. charges, and
3. No Mixing with Own Goods  The goods are perishable or the cost of
keeping the goods is more than their
value.

Duties of Pledger and Pledgee

Duties of Pledger Duties of the Pledgee

 Must pay the debt or perform the promise  Take reasonable care of the pledged
on time goods.
 Must compensate Pawnee for any loss  Not use the goods pledged for personal
caused by goods. purposes.
 Must disclose any faults or defects in the  Return the goods to the pledgor after the
goods. debt is repaid
 Must bear all necessary  Return any increase or profit from the
expenses if agreed. goods if any, like dividends or interest
 Avoid causing loss or damage to the

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goods through negligence.

Rights of Pledger Rights of the Pledgee

 Right to get the goods back after  Retain the pledged goods until repayment of
payment of debt. the debt or performance of the obligation.
 Right to claim damages if Pawnee  Sell the goods after giving reasonable notice
misuses the goods. to the pledgor, if default occurs.
 Right to receive any surplus if goods  Recover expenses incurred for preservation
are sold by Pawnee. of the pledged goods from the pledgor.
 Right to redeem goods before sale by  Sue the pledgor for the debt and retain the
paying the debt. goods as security.
 In case of multiple debts, retain the goods
for a general balance (if agreed upon).

Rights of Pledger and Pledgee

CASE STUDIES

1) Coggs v. Bernard (1703)

Gratuitous Bailment and Duty of Care

CASE: Bernard agreed to move several barrels of brandy for Coggs. He did not charge any money
for this favor. However, during transportation, Bernard dropped and damaged some barrels because
of his carelessness.

Judgment: Yes. The court ruled that even though Bernard was not paid, he was still responsible
because he had accepted the duty of care. His negligence made him liable.

2) Armory v. Delamirie (1722)

Rights of a Finder of Goods

CASE: A young chimney sweep found a jewel and took it to a goldsmith (Delamirie) to find out
what it was worth. The goldsmith’s apprentice took the jewel and refused to return it.

Judgment: Yes. The court held that the finder of lost goods has a right to keep them against
everyone except the true owner.

3) Kaliaperumal Pillai v. Visalakshmi (1938)

Safe Custody and Bailment

A woman left her gold jewelry with a jeweler for safekeeping while she was away. When 61
she
returned, the jeweler claimed the jewelry had been stolen and refused to return it.

Judgment: The court ruled that the jeweler, as a bailee, was expected to take reasonable care of the
 BUSINESS REGULATIONS

SELF ASSESSMENT QUESTION

 SHORT ANSWER 4. How do the legal rights of a bailor

1. How would you describe the concept differ from those of a bailee?
of bailment in contract law? 5. What is a lien in the context of
2. Provide a legal definition of the term bailment, and what is its purpose?
"bailment". 6. Discuss the duties and rights of a
3. What is meant by the term "pledge" bailee under a contract of bailment.
under the law of contracts? 7. Explain the difference between
4. What constitutes the subject matter in general lien and particular lien.
a contract of bailment?
5. What do you understand by the term  ESSAY
"gratuitous bailment"? 1. Discuss in detail the rights and duties
6. Explain the meaning and purpose of a of the Pawnor and the Pawnee in a
lien in the context of bailment. contract of pledge. Support your
7. Can you explain any two legal rights answer with relevant legal provisions.
available to a finder of lost goods? 2. Explain the concept and purpose of a
pledge. Why a pledge is considered an
 SHORT ESSAY important form of bailment in
1. List and explain the essential business transactions?
characteristics of a bailment contract. 3. Differentiate between pledge and
2. How is bailment classified? Describe bailment. How does a pledge form a
the various types with examples. special category of bailment?
3. Compare and contrast the Highlight the key legal differences
responsibilities of the bailor and the with examples.
bailee.

CHAPTER-9

CREATION OF AGENCY
Chapter Overview

 Meaning of contract do agency-Features-Classification-Creation of Agency.

 Delegation of Authority
 Substituted of Co-Agent-Difference between subagent and substituted Agent.
 Duties and Liabilities of Agent and Principal
 Termination of agency-Irrevocable agency

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A Contract of Agency is an agreement 1. Legal Relationship

between two people namely Principal and
Agent. Agency refers to the legal relationship
that exists between a principal and an
Section 182 of the Indian Contract Act, agent. Through this relationship, the
1872 defines the terms “Agent” and agent is authorized to act on behalf of
“Principal.” the principal.

Agent: A person employed to do any act 2. Agreement

for another or to represent another in
dealings with third persons. Agency must be created by an
agreement between the agent and the
Principal: The person for whom such act principal. This agreement can be
is done, or who is so represented. express or implied, but mutual consent
is essential.
A Contract of Agency is a legal
agreement where one person (the agent) is 3. Intention of the Agent
given the authority to act on behalf of
another person (the principal) to create The agent must have the intention to
legal relationships with others. It means act on behalf of the principal. Without
someone is allowed to act or make this intention, a valid agency
decisions for someone else in business or relationship cannot exist.
legal matters. 4. Consideration Not Necessary
(Section 185)
Rules of Agency
No consideration is needed to create an
1. "Qui Facit per Alium facit per se"
agency. It is sufficient that the
is a Latin legal term "He who acts
principal agrees to be represented by
through another acts through
the agent
himself."In the context of agency
law, this rule means that the 5. Competency of Principal and Agent
principal is legally responsible for
the actions of their agent when the The principal must be legally
agent is acting within the scope of competent that is, of the age of
their authority. majority and of sound mind. While any
It essentially treats the agent as an person may act as an agent, the
extension of the principal. principal must have the legal capacity
to appoint an agent. A minor or a
2. It means that when an agent acts on person of unsound mind cannot legally
behalf of a principal, the actions of employ an agent.
the agent are legally considered to
6. Free Consent
be the actions of the principal—but
only under certain conditions.

Features of agency

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The agreement between the principal b) Non-Mercantile Agent (Non-

and the agent must be made with free Commercial Agent): Not involved in
consent. It should be free from trade or business, acts on behalf of
coercion, undue influence, fraud, someone in non-commercial matters.
misrepresentation, or mistake.
Creation of Agency
7. Other Essentials
1) Agency by Express Agreement or
Depending on the circumstances, other Authority
legal elements may be required to
establish a valid agency, such as lawful This type of agency is created when
purpose and clear terms of authority. the principal clearly appoints someone
as their agent, either in writing or by
Classification of Agents spoken words. It’s called “express”
because the authority is directly
A. Based on the Extent of Their
communicated.
Authority
a) General Agent: Has broad authority According to Section 187, an
to act on behalf of the principal in all express agency is formed when the
matters related to a particular principal gives authority to the agent,
business. and the agent agrees to act on behalf of
b) Special Agent: Has limited authority the principal. This can happen through
for a specific task or transaction. a written contract or a verbal
c) Universal Agent: Has almost agreement.
unlimited authority to act on behalf
of the principal.
B. Based on the Nature of Work 2) Agency by Implied Agreement
Performed
a) Mercantile Agent (Commercial This type of agency is not created by
Agent): Engaged in trade and written or spoken words but is
business on behalf of the principal. understood from the conduct of the
Types include: parties or the situation. It happens
 Commission Agent: Sells goods when someone acts like an agent and
for commission. the other party behaves as if they
 Del Credere Agent: Acts like a accept that role.
commission agent but also
Types of Agency by Implied
guarantees payment.
Agreement:
 Factor: Takes possession of
goods and sells them in their a) Agency by Estoppel (Sec. 237)
own name.
If a person, by words or actions, makes
 Auctioneer: Sells goods in
others believe that someone is their
public auctions.
agent, they cannot later deny it.
 Broker: Brings buyers and
sellers together without Example: A company allows a person
possessing the goods. to act on its behalf in public, so the

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company must accept the actions of principal. Once the act is done, the
that person as an agent. principal has two choices:

b) Agency by Holding Out I. Accept (ratify) the act, making it

valid as if authorized from the
Similar to estoppel, but this happens
beginning.
through a pattern of behavior. If
II. Reject (disavow) the act, making
someone regularly helps in business
it invalid.
and is treated like an agent, others can
assume they are. Ratification means the principal
confirms and adopts the unauthorized
Example: A person often signs
act, thereby creating an agency
documents for a business, and the
relationship after the act is done.
business accepts it—others can believe
they are an agent. Conditions for valid ratification:
c) Agency by necessity  The agent must act on behalf of the
It arises when one person is compelled, principal.
by an urgent situation, to act on behalf  The principal must be in existence
of another without being expressly and competent at the time of the
authorized to do so, and it is act and at the time of ratification.
impractical to get the principal’s  The principal must have full
consent in time. knowledge of the material facts of
the act.
Conditions for Agency by Necessity:  Ratification must be done within a
reasonable time.
 The act must be lawful and capable
 There must be a real and urgent of being ratified.
necessity to act to protect the  The whole act must be ratified, not
principal’s interests just a part.
 It must be impossible or
unreasonable to communicate with 4) Agency by Operation of Law
the principal to get instructions in Agency by operation of law occurs
time. when the law automatically treats a
 The agent must act honestly and in person as an agent of another, even
good faith, prioritizing the best without an agreement. This usually
interest of the principal. happens in situations of necessity or
 The agent must not go beyond what certain relationships. Example: A wife
is necessary in the given situation. can bind her husband for necessities
when they are living together.
3) Agency by Ratification
Delegation of Authority
Agency by ratification arises when a
person (agent) acts on behalf of As per the general rule, an agent
another (principal) without prior cannot delegate his authority to another
authority or knowledge of the person. The agent is required to personally
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carry out the tasks or duties that have been  If the agent is unable to perform the
assigned to him. This is because the task due to illness or absence, and
principal has chosen the agent based on immediate action is needed, a sub-
trust and competence, so delegating agent can be appointed.
authority to someone else could undermine
that trust. Substituted or Co-agent

Delegation of Authority refers to an According to Section 194 of the Indian

agent passing on his authority to another Contract Act, 1872 "Where an agent
person (called a "sub-agent") to perform having authority to name another person
tasks or duties that were initially assigned to act for the principal, names another
to him by the principal. However, there are person accordingly, such person is not a
strict rules about delegation, particularly sub-agent but a substituted agent, and the
within the context of an agency principal is represented by such
relationship under Section 190 of the substituted agent as if he had been
Contract Act. appointed by the principal himself."

Conditions to appoint Sub Agent If an agent is allowed (by the principal)

to appoint someone else, that person is
 The agent can appoint a sub-agent if called a substituted agent. The substituted
the principal gives direct permission. agent works directly for the principal, not
 The agent can appoint a sub-agent if for the original agent.
the nature of the work suggests that
delegation is necessary or expected. The principal is responsible for the acts
 The agent can appoint a sub-agent if it of the substituted agent, not the original
is a common practice in that type of agent, as long as the agent chose the
business. substituted agent properly.
 The agent can appoint a sub-agent in Example: charu lives in Delhi and
urgent situations where the agent appoints sravya in Mumbai to handle legal
cannot perform the task personally. matters and gives him power to appoint a
 The agent can delegate routine or lawyer. Sravya hires Risvan, a lawyer in
mechanical tasks that do not require Chennai. Risvan is a substituted agent
personal judgment. working directly for charu.
 If the principal knows about the sub-
agent or agrees to it, the appointment is
valid.

Difference between Sub agent and Substituted agent

Aspect Sub-Agent Substituted Agent

A person appointed by the A person appointed by the agent,
Definition original agent to assist in duties under authority from the principal,
under the agent’s control. to act in place of the agent.
The original agent (with or
Appointed By without the principal’s The agent, but with the principal's
knowledge). authority or approval.

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 BUSINESS REGULATIONS

Works under the supervision and Works directly under the principal,
Control
control of the original agent. not under the original agent.
No direct privity; not directly
Direct privity; stands in place of
responsible to the principal
Relationship with the original agent and is directly
(unless fraud/negligence).
Principal responsible to the principal..
The original agent is responsible The substituted agent is directly
Responsibility for the sub-agent’s acts. responsible to the principal for
their actions
An agent unable to perform a task
An agent for a company hires a delegates it to another qualified
Example Situation
junior clerk to help perform tasks agent with the principal’s
permission.

Duties of Principal When the agent faces a difficult

situation or confusion, he must contact
1. To remunerate the agent for his the principal, who then has the right to
services guide or instruct the agent on how to
The principal must pay the agent the proceed.
agreed-upon payment or commission 5. To indemnify the agent against the
for the services rendered consequences of all lawful acts
2. To indemnify the agent against the If the agent performs any legal action
consequences of all lawful acts on behalf of the principal and incurs a
If the agent performs any legal action loss, the principal must compensate
on behalf of the principal and incurs a (indemnify) the agent for that loss.
loss, the principal must compensate 6. To get proper accounts on demand
(indemnify) the agent for that loss. from his agent
3. To indemnify the agent against the The principal has the right to ask the
consequences of an act done in good agent to provide accurate and complete
faith, even though the act causes an financial or transactional records
injury to the rights of third persons related to the agency.
If the agent acts honestly and in good Duties of an Agent
faith, and the action unintentionally
causes harm to a third party, 1. To conduct business as per
directions or custom of trade
The principal is still required to [Section 211]
protect the agent from any resulting
loss or legal consequences. The agent must follow the instructions
given by the principal. If no specific
4. To give instructions in cases of instructions are given, the agent should
difficulty, when contracted by the act according to standard trade
agent practices.

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 BUSINESS REGULATIONS

2. To act with reasonable care, skill If the agent acts within the scope of
and diligence [Section 212] actual or apparent authority, the
principal is bound by the agent’s
The agent must perform their duties actions.
with proper skill, care, and attention—
just as a competent person would in The third party can hold the principal
similar circumstances. liable, not the agent (unless the agent
acts outside the scope or does not
3. Duty to render proper records disclose the principal properly).
[Section 213]
2) Section 227 – Acts Exceeding
The agent must maintain and provide Authority (Partly Within Authority)
accurate records of all transactions and
activities related to the principal’s If an agent performs an act that is
business, whenever the principal partly within and partly outside his
requests them. authority, and the two parts can be
separated, the principal is bound only
4. Duty not to deal on his own account to the extent of the authorized part.
[Sections 215 & 216]
3) Section 229 – Notice to Agent is
The agent must not use the principal’s Notice to Principal
business for personal benefit. If they
want to do so, they must get prior Any notice or information given to the
permission from the principal and fully agent, in the course of the business he
disclose the situation. is employed for, is deemed to have
been given to the principal. This makes
Liabilities of an Agent and Principal the principal liable for consequences
A. Liability of Principal and Agent to based on such notice.
Third Parties

The rights and liabilities of a principal in

4) Section 237 – Apparent Authority
relation to third parties largely depend on
whether the principal is: If the principal, by his conduct or
words, induces third parties to believe
 A named principal (both name and
that an unauthorized act by the agent
existence disclosed),
was authorized, the principal is bound
 An unnamed principal (existence
by that act. This applies even if the
disclosed, but name concealed),
agent lacked actual authority.
 An undisclosed principal (existence
and name both concealed). 5) Section 238 – Misrepresentation or
Fraud by Agent
This discussion focuses on the named
principal, where the agent acts expressly If a misrepresentation or fraud is
on behalf of a disclosed principal. committed by an agent while acting in
the course of business for the principal,
1) Agent Acts within Authority
the principal is liable as if he himself
committed the act.
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 BUSINESS REGULATIONS

6) Admission by Agent Termination of Agency

Any admission or statement made by Termination of agency refers to the end
the agent, while acting within his or cancellation of the relationship between
authority, binds the principal. a principal and an agent. This termination
can occur in two ways:
B. Personal liability of an agent in
simple terms  By the Act of the Parties
 By Operation of Law
1. Acts within Authority
1. Termination by the Act of the
If an agent acts within the authority
Parties
given by the principal, the agent is
usually not personally liable. This occurs when the principal or the
agent or both take actions that bring
2. Acts Beyond Authority
the agency relationship to an end. It
If the agent exceeds their authority, includes the following situations:
they can be personally liable for losses
a) Mutual Agreement: The agency can
caused.
be terminated if both the principal and
3. Undisclosed Principal the agent agree to end it.
b) Revocation by the Principal: The
If the agent does not reveal that they principal has the authority to revoke
are acting on behalf of someone else, the agency, thereby ending the
they may be personally liable. relationship.
c) Renunciation by the Agent: The
4. Fraud or Misrepresentation
agent can also end the agency by
An agent is personally liable if they
renouncing (declaring that you are
commit fraud or mislead someone,
giving up or rejecting something) their
even if acting for a principal.
position.
5. No Principal Exists
2. Termination by Operation of Law
If an agent makes a contract but no real
An agency may also be terminated
principal exists (or the principal lacks
automatically due to certain legal
capacity), the agent can be held liable.
circumstances. These include:
6. Personal Guarantee
a) Performance of the Contract: When
If an agent personally guarantees a the purpose of the agency is
transaction, they become liable by fulfilled, the agency ends.
agreement. b) Expiry of Time: If the agency was
created for a specific period, it
7. Foreign Principal ends when that period expires.
In some cases, agents acting for c) Destruction of the Subject Matter:
foreign principals may be held liable If the subject of the agency is
unless they clearly state otherwise. destroyed, the agency is
terminated.

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 BUSINESS REGULATIONS

d) Death or Insanity: The death or Re-irrevocable Agency

mental incapacity of either the
principal or the agent ends the Generally, an agency can be revoked by
agency. the principal. However, in certain
e) Insolvency of the Principal: If the situations, revocation is not allowed.
principal becomes insolvent or Four Situations Where Agency Cannot Be
bankrupt, the agency is terminated. Revoked:
f) Principal Becomes an Alien Enemy:
If the principal becomes an enemy 1. Agency coupled with interest: Covered
of the country (e.g., during war), under Section 202.The agent has a
the agency ends. personal interest in the subject matter of
g) Impossibility of Performance: If it the agency.
becomes impossible to carry out
2. When authority has been exercised:
the task for which the agency was
the agent has already acted on the
created, it terminates.
authority given.

3. When authority is partly exercised:

h) Dissolution of a Company: If a The agent has begun performing part of
company involved in the agency the assigned task.
relationship is dissolved, the
4. When agent has incurred personal
agency ends.
liability: The agent has taken on personal
i) Termination of Sub-Agent's
responsibility based on the agency.
Authority: If the authority of a sub-
agent is terminated, it can also end
the main agency.

CASE STUDIES

1) Case: Syed Abdul Khader v. Rami Reddy (AIR 1979 SC 553)

Judgment: An agent entered into a business contract on behalf of a principal. The principal claimed
he had not directly authorized the contract and wanted to avoid liability.

Judgment: The Supreme Court ruled that the principal was liable because the agent had acted within
his apparent authority—meaning, his actions seemed legitimate to outsiders based on past dealings
or position.

2) Real Estate Agency

Michael Adams owns a residential property in Cityville he wishes to sell. On May 1, 2025, he enters
into a Real Estate Agency Agreement with Rebecca Lee, a licensed real estate agent. The agreement
appoints Rebecca as his exclusive agent to sell the property for a commission of 5% of the final sale
price. The term of the contract is six months. 70
Execution: Rebecca lists the property on the local MLS and hosts several open houses. After a
month, a buyer offers $400,000. Rebecca negotiates the offer and closes the deal at $410,000. The
sale is finalized in July 2025.
 BUSINESS REGULATIONS

3) Case: P. Krishna Bhatta v. Mundila Ganapathi Bhatta (AIR 1955 Mad 648)

Case: An agent was appointed to manage a property but went beyond his given authority by entering
into a transaction the principal had not approved. The other party involved in the deal assumed the
agent had the right to make such a deal.

Judgment: The Madras High Court held that the principal was not liable for the agent’s unauthorized
actions. The court stated that a principal is only bound by the actions of an agent that are within the
agent’s actual or apparent authority. In this case, the agent exceeded both.

4. Case: Harsha Vardhan Singh v. State of M.P. (AIR 1980 MP 136)

CASE: An agent made a contract without proper authority. Later, the principal accepted the benefits
that came from the contract.

Judgment: The Madhya Pradesh High Court held that the principal’s acceptance of the benefit meant
he had ratified the act. This ratification made the contract legally valid from the start.

5. Case: National Bank of India Ltd v. R. Raghunathan (AIR 1948 Mad 396)

CASE: An agent entered into a contract and signed it in his own name without disclosing that he
was acting for a principal.

Judgment: The Madras High Court ruled that the agent was personally liable because the third party
didn’t know he was just an agent. If the principal is not disclosed, the agent bears responsibility.

6) Case: Darius Rutton Kavasmaneck v. Gharda Chemicals Ltd. (2001)

CASE: The principal wanted to terminate the agency before the agreed time, but the agent objected
because the agency was tied to a personal interest or investment.

Judgment: The court held that the agency could not be revoked as it was "coupled with interest".
Under Section 202 of the Contract Act, such an agency is irrevocable without the agent’s consent.
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SELF ASSESSMENT QUESTION which an agency can be

terminated.
 SHORT ANSWER
1) Who is an Agent?  ESSAY
2) Who is a Principal in a contract of 1) Discuss in detail the duties of an
agency? agent and a principal under the law
3) What is meant by Agency under of agency.
the Indian Contract Act, 1872? 2) Explain the legal liabilities of both
4) Who is eligible to be employed as the agent and the principal in
an agent? various situations under the
5) What is an Undisclosed Principal? Contract Act.
6) Who is called an Unnamed 3) Evaluate the significance of the
Principal? contract of agency in the present-
7) What is a Sub-Agent? day global business environment.
8) Who is a Substituted Agent? 4) Discuss the concept of ratification
9) What is meant by Termination of in the law of agency and analyze
Agency? its legal effects on contracts made
without prior authority.
 SHORT ESSAY
1) Explain the rights of an agent
under the Indian Contract Act,
1872.
2) Describe the different kinds of
agents with suitable examples.
3) Distinguish between a sub-agent
and a substituted agent.
4) Briefly explain the concept of
agency and the various modes by

CHAPTER-10

CONTRACT FOR SALES OF GOODS

Chapter overview
72
 Sales of goods act 1930 – Basic concepts
 Type of goods
 BUSINESS REGULATIONS

A contract for the sale of goods  Section 2(2) Delivery: means

is simply an agreement between two voluntary transfer of possession from
parties where one agrees to sell certain one person to another."
goods and the other agrees to buy them.  Section 2(7) Goods: means every
It's a mutual understanding that involves kind of movable property other than
the exchange of goods for money or actionable claims and money; and
another agreed-upon form of payment. includes stock and shares, growing
crops, grass, and things attached to or
It is a special type of Act, Sales of forming part of the land which are
Goods Act 1930, which initially a part of agreed to be severed before sale or
the Indian Contract Act 1872. under the contract of sale."
Before the enactment of the Sale of  Section 2(13) Seller: means a person
Goods Act, 1930, matters relating to the who sells or agrees to sell goods."
sale of goods were governed by the Indian TYPES OF GOODS
Contract Act, 1872.
1. Existing Goods
Originally, provisions related to the sale
of goods were included under Section 6 to Goods that already exist at the time
Section 123 of the Indian Contract Act. when the contract is made.

However, in order to provide a separate Existing goods are further divided into:
and detailed framework, a new law the
Indian Sale of Goods Act, 1930 was a) Specific Goods
passed. The Act came into force on 1st Goods identified and agreed upon at
July 1930. Later, in 1963, the word the time the contract of sale is made.
"Indian" was dropped from its title, and it
became known simply as the Sale of Example: You go to a shop and buy a
Goods Act, 1930. specific painting hanging on the wall.
That painting is specific goods it was
Section 4(1) defines "A contract of sale clearly identified when the contract
of goods is a contract whereby the seller was made.
transfers or agrees to transfer the property
in goods to the buyer for a price. There b) Ascertained Goods
may be a contract of sale between one part
Goods that are identified later, after
owner and another."
the contract is made.
Basic Concepts
Example: A contract says "I will buy
 Section 2(1) Buyer: means a person 10 sacks of rice from your warehouse."
who buys or agrees to buy goods. After the contract, the seller selects 10
specific sacks and sets them aside.

73
 BUSINESS REGULATIONS

These selected sacks become Example: You make a contract with a

ascertained goods they were identified farmer to buy mangoes from next
after the contract. season’s crop. Since the crop hasn't
grown yet, these are future goods.
c) Unascertained Goods
3. Contingent Goods
Goods that are not yet specifically
identified at the time of contract. Goods that depend on a contingency
meaning something uncertain that may
Example: You order "10 sacks of rice" or may not happen.
from a warehouse containing 1,000
sacks, but no specific sacks are Example: You agree to buy a car from
selected yet. This is unascertained a seller if he manages to import it from
goods. another country. If the car doesn't
arrive, the sale won’t happen. So the
2. Future Goods goods (the car) are contingent goods
Goods that do not exist at the time of the sale depends on an uncertain event.
contract but will be made, grown, or
acquired in the future.

CASE STUDIES
S. M. Sundram v. R. V. Krishnaswami Chettiar Citation: AIR 1938 Mad 27

The case is often referenced in connection with Section 15 and Section 16 of the Act, focusing on
whether the goods delivered matched the contractual description and was fit for the purpose intended.

Case: In this case, a buyer ordered a specific quality of groundnut oil. The seller delivered oil that did not
match the agreed description or quality. The buyer refused to accept the goods and was sued by the
seller.

Judgment: The court held that the goods did not correspond with the contract description and quality,
and hence the buyer was entitled to reject them. It reinforced the principle that in a contract for sale by
description, the delivered goods must conform strictly to the description.

SELF ASSESSMENT QUESTIONS  ESSAY

1. Evaluate the historical background of
 SHORT ANSWERS
Sales of goods Act 1930.
1. Who is buyer?
2. Who is seller?

 SHORT ESSAY
1. What are the different types of goods?

CHAPTER-11

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ESSENTIALS OF CONTRACT OF SALE

Chapter overview

 Essential elements of contract of sales of goods act 1930

 Difference between sale-agreement to sell – hire purchase – bailment – mortgage
 Price of goods – documents of title to goods
 Earnest money

The Contract of Sale of Goods Act, Such as when the goods are delivered,
1930 defines the sale of goods and outlines when payment is made, or when the
the essential elements that must be present goods are identified as the ones to be
for a valid contract of sale. sold.

1. Two Persons: Buyer and Seller It's important to note that the transfer
of ownership is different from the
A contract of sale of goods requires transfer of possession, which may
the involvement of two parties: a seller happen at different times.
and a buyer. The seller agrees to
transfer the goods to the buyer, and the 4. Delivery of Goods
buyer agrees to pay for the goods.
Delivery refers to the act of handing
2. Subject Matter: Movable Goods over the goods from the seller to the
buyer, which is a crucial step in the
The goods that are being sold must sale. Delivery can happen in several
be movable property. Movable goods ways:
refer to physical items that can be
transferred from one place to another,  Immediate Delivery: The goods are
such as machinery, electronics, or transferred right away at the time
clothing. Immovable property like land of the agreement.
or buildings is excluded from the scope  Delivery in Installments: Goods
of this act. may be delivered in parts at
different a time, which is agreed
3. Transfer of Property (Ownership upon by both parties.
Rights)  Delivery at a Future Date: The
Transfer of property means that delivery can be set for a future
ownership of the goods is transferred time, provided both parties agree.
from the seller to the buyer. The 5. Price
transfer of ownership is absolute, Price refers to the money or
meaning the buyer acquires full consideration paid for the goods being
ownership rights over the goods. The sold. The price must be ascertainable,
point of transfer could depend on
various factors, Meaning it can be determined from
the contract or by external methods if
not specifically stated.
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 BUSINESS REGULATIONS

The price does not necessarily have  Absolute Contract: In this type, the
to be a specific amount; it can also be transfer of goods happens without
determined based on a formula or an any conditions attached.
agreed-upon method, such as market  Conditional Contract: Here, the
price. The agreement is not valid sale is dependent on certain
without the determination of price. conditions being met, such as
payment of the price or availability
6. Contract of Sale: Absolute or of the goods.
Conditional 7. Essential Elements of a Valid
A contract of sale can be either Contract
absolute or conditional: A sale of goods contract must also
adhere to the basic requirements for
any valid contract

Difference between Sale and other similar Transactions

Aspect Sale Agreement to Hire Bailment Mortgage

sell Purchase

Definition Transfer of An agreement Renting or Temporary Transfer of

ownership of to transfer leasing goods transfer of Property as
goods for a ownership at a or property for goods for security for
price future date fee safekeeping loan
Transfer of immediate Ownership No transfer of No transfer of Ownership
Ownership transfer of transferred in ownership ownership remains with
ownership the future Borrower until
subject terms debt is cleared
Consideration Money paid Agreement to Rent or hire Bailor does Loan Amount
for goods pay a price charge paid for not pay for and interest.
later subject to the use of safekeeping
conditions goods only for
services
Risk Risk passes to Risk remain Risk remains Risk stays Risk remain
the buyer with the seller with the owner with the bailor with the
Immediately until the sale is of the goods borrower
complete unless for
foreclosure
occurs
Purpose To transfer To create an To To Safeguard To secure a
ownership of obligation to Temporarily goods loan with
goods for transfer use goods or temporarily property as
value ownership in property collateral
future
Example Selling a Car Signing a Renting a Lending an Taking a home
contract to buy house or a item like a loan required
a car payment vehicle camera to a by the house
later friend

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Price of Goods: Section 2(10) Document of title to goods

This section defines the "price" as the Section 2(4) of the Sales of Goods Act,
money consideration agreed upon in the 1930 defines "document of title to goods"
contract for the sale of goods. as a document that shows the ownership of
goods or entitles the holder to possess,
Section 9 - Ascertained Price: It talks transfer, or receive the goods. This
about how the price of goods can be document can be something like a bill of
determined (ascertained) in the following lading, warehouse receipt, or dock
ways: warrant, which can be used to transfer the
 By the contract itself: If the ownership or possession of goods.
contract specifically mentions the Earnest money
price.
 By agreement: If the parties agree Earnest money is a small amount of
upon a price. money that a buyer gives to a seller when
 Course of dealings: If there’s an they agree to buy something. It shows that
established pattern in the way the the buyer is serious about the deal.
parties have conducted business
previously, it can help determine If the sale happens, the earnest money
the price. usually goes towards the price of the item.
 Reasonable price: If no price is But if the buyer changes their mind and
agreed upon, the price can be based cancels the deal without a good reason, the
on what is reasonable in the seller can keep the earnest money.
circumstances.
 Government or market authorities:
If the price is fixed by law or
government regulation.

CASE STUDIES

1) Varley v. Whipp (1900) 1 QB 513

Element Involved: Sale by Description

CASE: The seller (Varley) sold a reaping machine to the buyer (Whipp), describing it as "nearly
new" and used only once. The transaction happened without the buyer inspecting the machine.
When the machine was delivered, it turned out to be heavily used and in poor condition. The buyer
refused to accept it and brought a claim.

Judgment: The court ruled in favor of the buyer. It held that the goods did not match the description
under which they were sold. This was a breach of condition, not just a minor breach. The buyer was
entitled to reject the goods and recover his payment.

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2) Baldry v. Marshall (1925) 1 KB 260

Element Involved: Fitness for Purpose

Case: The buyer told the seller he needed a car suitable for long-distance touring. The seller
recommended a specific car model (a Bugatti).The car turned out to be unsuitable for touring and
developed issues. The buyer sued the seller for breach of contract.

Judgment: The court held that there was indeed a breach of implied condition under the Sale of
Goods Act. Since the buyer relied on the seller’s expertise, the seller was bound to supply goods
reasonably fit for that stated purpose.

SELF ASSESSMENT QUESTIONS

 SHORT ANSWER
1. What is the subject matter of
goods in the contract of sale act?
2. What do you mean by delivery of
goods?
3. Hire purchase –explain
4. What do you mean by Mortgage?
5. Earnest money-Discuss?

 SHORT ESSAY
1. what are the type of delivery?
2. Write a short essay on Price of
Goods?
3. Critically evaluate the
importantance of sales of goods act
1930?
4. Document title of Goods? Analyze
the importantance of it in contract
of sale of goods?
5. What do you mean by Agreement
to sell and its features?

 ESSAY
1. Differentiate between Sale,
agreement to sell, Hire purchase,
Bailment, Mortgage?
2. Evaluate the essential elements of
Sales of goods act 1930?

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CHAPTER 12

CONDITIONS AND WARRANTIES

Chapter Overview

 Condition-Warranty meaning-Consequences of breach of condition and warranty

 Express and Implied condition and warranty

In a contract, there are many Its breach gives the right to claim
stipulations (terms and conditions). damages (compensation), but not the right
to reject the goods or treat the contract as
Some stipulations are very important cancelled.
they go to the heart of the contract. These
are called conditions.
Warranty = a side condition
If a condition is broken, the whole (important but not the heart of the
contract can be cancelled. contract).

Other stipulations are less important.

They are called warranties. Example:

If a warranty is broken, the contract is Imagine you order a red car from a dealer.
not cancelled, but you might get Condition: The main condition is that you
compensation. must receive a car.
Section 12(1) "A contract of sale of If they don’t give you any car, you can
goods may contain terms (stipulations) cancel the contract.
that are either conditions or warranties."
Warranty: A small warranty is that the car
Section 12(2) -"A condition is a stipulation should be red.
essential to the main purpose of the
contract, the breach of which gives the If they deliver a blue car instead, you
aggrieved party the right to treat the can’t cancel the contract
contract as repudiated (i.e., cancel the
But you can ask for compensation or
contract)."
maybe repaint.
Condition = a very important term; if Condition = Very important, contract
it’s broken, the buyer can cancel the depends on it.
whole contract.
Warranty = Less important, contract
continues even if broken.
Section 12(3) “Warranty is a stipulation
collateral to the main purpose of the
contract”.

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Consequences of Breach of Condition and Warranty

Consequences of Breach of Condition Consequences of Breach of Warranty

 Right to Repudiate the Contract  No Right to Reject the Goods

The affected party can cancel (terminate) Unlike a condition, a breach of warranty
the contract. does not give the buyer the right to reject
 Right to Claim Damages the goods. The buyer must accept the
The affected party can also sue for goods but can still claim damages.
compensation (damages).  Right to Claim Damages
 Treatment as a Warranty The affected party has the right to claim
If the buyer chooses, they can treat the damages (compensation) for any loss
breach of condition as a breach of caused by the breach of warranty, but
warranty — meaning they will claim only cannot cancel the contract or reject the
damages and not cancel the contract. goods.
 No Remedy if Excused by Law  No Remedy Due to Law
If the seller is legally excused (e.g., If the fulfillment of the warranty becomes
impossibility, waiver by buyer), the buyer impossible due to legal reasons or any
cannot claim any remedy. other situation beyond the control of the
parties, no remedy is available. The seller
may be excused from liability in such
cases.

Express and Implied condition and

warranties (Section 14 to 17)

Express Conditions are the conditions or

rules that are directly stated in the contract. Implied Conditions
On other hand Implied Conditions are 1. Condition as to title -Section 14(a)
those conditions that are not written but
are automatically part of the contract by It means that when someone sells
law. goods, it is automatically assumed
(implied) in the contract that the seller
An express warranty is a promise made has the legal right to sell those goods.
by a seller or manufacturer that a product
will work as described on other hand The buyer expects that the seller is the
Implied Warranty is a promise that the true owner of the goods or has the
product is of decent quality and works as authority to sell them.
expected, even if not specifically written
in the contract. If it doesn’t, you can get
compensation, but it doesn’t cancel the
contract.

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If it turns out that the seller has no  The buyer must get a reasonable
right or authority to sell the goods (for chance to compare the bulk with the
example, if the goods were stolen), the sample.
buyer can reject the goods and claim a  The goods must be free from hidden
refund or even claim damages. defects that would make them unfit for
use.

2. Sale by Description-Section 15 6. Implied Conditions as to Quality or

Fitness-Section 16
This section states that when goods
are sold by description, there is an A. Section 16(1): No Automatic
implied condition that the goods must Guarantee
correspond exactly with the description
Normally, a seller is not automatically
given. If it does not match; the buyer
responsible for the quality or fitness of
can reject the goods, as the condition
goods for a buyer’s specific purpose.
of description is not fulfilled.
The buyer must check if the goods suit
3. Sale by Sample and Description- their purpose before buying. If the
Section 15 goods don’t fit the buyer’s need later,
the seller is not at fault unless these
If goods are sold using both a sample conditions are met.
and a description, the goods must
match both:  The buyer tells the seller exactly
what purpose they need the goods
The description given. for.
The sample shown.  The buyer relies on the seller’s
skill or advice.
If they don't match either, the buyer  The seller is someone who
can reject the goods. regularly sells goods (by
description) of that type as part of
4. Condition as to Merchantable
their business.
Quality-Section 16(2)

If goods are sold by description, B. Section16 (2): Merchantable Quality

there is an implied condition that they If goods are sold by description, there
must be of merchantable quality. That is an implied condition that they
means the goods should be good should be of merchantable quality, i.e.,
enough to be sold and used for their fit for ordinary use and free from
ordinary purpose. defects.
5. Sale by Sample-Section 17 C. Section 16(3): Implied Conditions by
Custom
When goods are sold by sample, the
following implied conditions apply: Sometimes, trade customs or practices
can create implied conditions about
 The bulk of the goods must match the
quality or fitness.
sample in quality.
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7. Condition of Wholesomeness (for

Food)
2) Warranty of Freedom from
For eatables or provisions, the goods Encumbrances-Section 14(C)
must be safe to consume and of good
quality. There is an implied warranty that the
goods shall be free from any charge or
Implied Warranties encumbrance (legal liability) in favor
of a third party, not declared or known
An implied warranty refers to an to the buyer at the time of the contract.
unwritten guarantee that the goods or
services being sold meet certain minimum If such a charge or
standards, even though it's not explicitly encumbrance exists, the buyer is
stated in the contract. entitled to claim damages for breach of
this warranty.
It’s automatically assumed by law to
exist in most contracts for the sale of Example: If a seller sells a car to a
goods. buyer, and it is later discovered that the
car is subject to a loan with a finance
If the seller fails to meet these implied company (i.e., the car is collateral for
warranties (a "breach of warranty"), the an unpaid loan), and this was not
buyer may be entitled to compensation, disclosed to the buyer, the buyer can
usually in the form of damages. claim damages from the seller for
1) Warranty of quite possession - breach of warranty.
Section 14(b) The existence of the loan constitutes an
This means that when you buy encumbrance.
goods, the seller promises (even if it's 3) Warranty as to Quality or Fitness
not written) that you will have the right by Usage of Trade -Section 16,(3)
to use and keep the goods without
interference from others such as An implied warranty regarding the
someone claiming they actually own it. quality or suitability of goods for a
You can claim for damages that time. specific purpose can be established
through the usage of trade.
Example: You rent an apartment from
a landlord. Two months later, someone 4) Warranty as to Disclose Dangerous
shows up claiming they actually own Nature of Goods
the apartment and tries to evict you.
If the goods are dangerous, the seller
If that person really has a stronger must disclose this information.
legal claim, your right to quiet
possession has been violated.

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CASE STUDIES

1) Ghaziabad Development Authority v. Union of India (AIR 2000 SC 2003)

Element Involved: Difference between Condition and Warranty

Case: The Ghaziabad Development Authority entered into a contract with the Union of India for the
supply of construction materials for a project. The materials supplied were defective and did not
meet the specifications mentioned in the contract. The Ghaziabad Development Authority wanted to
reject the goods but the Union of India contended that the breach, if any, was a breach of warranty
(which wouldn't entitle the buyer to reject the goods), and not a condition.

Judgment: The Supreme Court ruled that a breach of condition gives the buyer the right to reject the
goods, while a breach of warranty entitles the buyer to only claim damages .

2) Rowland v. Divall (1923) 2 KB 500

Element Involved: Implied Condition – Title of Goods

Case: The buyer purchased a second-hand car from the seller. The seller represented that they had
full ownership of the car and the right to sell it. It was later discovered that the car had been stolen.
Despite the car being in the buyer's possession and being used, the buyer learned that the seller had
no title or ownership of the vehicle.

Judgment: The court held that the seller’s breach of the implied condition of title under Section 14
of the Sale of Goods Act 1930 was fundamental.

Since the seller did not have legal ownership or title to the car, it was a breach of the implied
condition that the seller must have the right to sell the goods.

Even though the buyer had used the car, the lack of title gave the buyer the right to rescind the
contract and return the car for a full refund.

SELF ASSESSMENT QUESTIONS

 SHORT ESSAY
 SHORT ANSWER 1. Explain the concept of implied
1. What do you mean by conditions? condition and warranty?
2. What do you mean by warranty?
3. Merchantable Quality means?
4. What is implied condition?
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2. Evaluate Difference between  ESSAY

consequences of breach of condition 1. What is the importance of condition
and breach of warranty. and warranty in contract of sale of
goods act?

CHAPTER-13

CAVEAT EMPTOR AND SALE BY NON-OWNERS

Chapter overview

 Doctrine of caveat Emptor-Exceptions

 Sale by non-owners-Exceptions to general Rule
 Performance of contract-Delivery of Goods

The doctrine of Caveat Emptor is a 1. Fitness for Buyer’s Purpose (Section

fundamental principle in contract law and 16(1))
commercial transactions, and it translates
to "let the buyer beware." If the buyer informs the seller of a
specific purpose for which the goods
This doctrine places the responsibility are required, and relies on the seller’s
on the buyer to perform due diligence skill or judgment, it is implied that the
before making a purchase. Under the goods shall be reasonably fit for that
doctrine of Caveat Emptor, the buyer is purpose. Seller is liable if the goods
responsible for checking the quality, don’t serve the stated purpose.
suitability, and condition of goods before
purchasing them. 2. Sale under Patent or Trade Name

If the product turns out to be defective If a buyer specifically asks for a

or unsuitable after the purchase, the seller product by its brand name or patent,
is not liable, unless the buyer was misled the seller must deliver that exact
or the seller made an express warranty or product. If the product is defective, the
representation. seller can still be held liable despite the
buyer naming the brand.
 Buyer’s Responsibility
 Limited Seller Liability 3. Merchantable Quality (Section
16(2))
Exceptions to the Doctrine of Caveat
Emptor Goods sold by description must be of
merchantable quality fit to be sold and
While the doctrine generally places the used as expected. If the goods are not
burden on the buyer, there are legal of acceptable quality, the buyer has a
exceptions where the seller can be held right to reject them and the seller is
liable. liable.

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4. Usage of Trade valid title to the goods. This protects the

rights of the true owner.
If a certain quality or standard is
implied by trade usage, it becomes Exceptions to the General Rule
binding. Goods must conform to the
General Rule (Section 27) Only the owner
customary standards accepted in that
particular trade. (or someone authorized) can transfer good
title.
5. Consent Obtained by Fraud
Exception: If a person not the owner sells
If the seller induces the buyer into a the goods, the buyer does not get a good
contract through fraud or deceit, title unless the sale falls within certain
exceptions.
the contract is voidable. The seller is
liable for any loss or 1. Sale by Mercantile Agent (Section 27)
misrepresentation.
Mercantile agent (broker, auctioneer)
6. Sale by Sample (Section 17) in possession of goods with the
owner's consent can sell them, and the
If a sale is made by sample, there’s an buyer gets a good title if:
implied condition that:
 The agent sells in the ordinary
 The bulk will correspond with the course of business.
sample in quality.  The buyer acts in good faith and
 The buyer will have a reasonable has no knowledge of lack of
opportunity to compare. If the authority.
goods differ, the seller is liable. 2. Sale by One of the Joint Owners
(Section 28)
7. Misrepresentation
If one joint owner has sole
If the seller misrepresents any possession with the others' consent,
material fact about the product, even and sells the goods, the buyer gets a
without fraud, and the buyer relies on good title if the buyer acts in good
it, the seller is liable. This includes faith and without notice of the lack of
false claims, misleading authority.
advertisements, or hiding defects.
3. Sale of Goods Obtained Under
SALE BY NON OWNERS (section 27- Voidable Contract (Section 29)
30)
If the seller obtained goods via a
General Rule (Section 27): The principle voidable agreement (e.g., through
of "Nemo dat quod non habet" applies. fraud or misrepresentation), and sells
Means "No one can give what they do not them before the contract is rescinded,
have." the buyer gets a good title if the buyer
If a person sells goods without owning acts in good faith and without notice of
them or without the owner's permission or the defect.
authority, the buyer does not acquire a

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4. Sale by Seller in Possession After resell the goods. The buyer in resale
Sale (Section 30(1)) gets good title.

If a seller, after selling the goods, 7. Sale Under Other Acts

remains in possession and resells them,
the second buyer gets good title if the That includes Sale by Official
buyer is in good faith and has no notice Receiver /Liquidator (under insolvency
of the prior sale. law), Sale by Court Order
(auction sales), Sale by Pawnee under
5. Sale by Buyer in Possession Before the Indian Contract Act, 1872.
Title Passes (Section 30(2))
Performance of Contract - Delivery of
If a buyer obtains possession of goods Goods
with the seller's consent before title
passes, This is generally refers to the duty of the
seller to deliver the goods and the duty of
And sells them to a third party, that the buyer to accept and pay for them in
third party gets a good title if they act accordance with the terms of the contract.
in good faith and without knowledge
of the seller’s rights. "Unless otherwise agreed, delivery of
goods and payment of the price are
6. Resale by an Unpaid Seller (Section concurrent conditions."
54(3))
 The seller must be ready to deliver
An unpaid seller who has exercised the goods.
right of lien or stoppage in transit can  The buyer must be ready to pay at
the time of delivery.

Types of Delivery in a Contract of Sale

Actual Delivery Symbolic Delivery Constructive Delivery

When goods are already with a

When physical delivery isn’t
Physical transfer of goods from third party, and that party
possible, a symbol representing
seller to buyer. acknowledges they now hold
the goods is delivered.
them on behalf of the buyer.

Example: Handing over the

Example: Handing over a Example: A warehouse operator
keys to a warehouse or a bill of
purchased mobile phone in a holding goods agrees to hold
lading representing possession
store. them for the buyer after a sale.
of goods.

CASE STUDIES

1. Ward v. Hobbs (1878)

Case: Pigs were sold at auction with a notice saying “sold with all faults.”

Issue: The pigs had a contagious disease, which the buyer later discovered. Decision: The seller was
not liable.
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Reason: Under caveat emptor, the buyer should have inspected the pigs. The seller didn’t
misrepresent anything—he just didn’t disclose the defect.
 BUSINESS REGULATIONS

2. Frost v. Aylesbury Dairy Co. (1905)

Case: Milk sold by the dairy contained typhoid germs. A customer's wife died after consuming it.

Issue: Can the buyer sue for the defective (dangerous) product?

Decision: The dairy was liable.

Reason: Food must be fit for consumption. This is an exception to caveat emptor—buyers trust
sellers of food to provide safe products.

3) Case: Rowland v. Divall (1923)

Mr. Rowland, a car dealer, bought a car from another dealer and later sold it to Mr. Divall, a
customer.

After a few months, it was discovered that the car had been stolen before Rowland bought it. The
true owner reclaimed the car from Mr. Divall. Mr. Divall then sued Mr. Rowland to recover the
purchase price.

Decision: The court held that the seller had no title to pass, and therefore the buyer acquired no legal
ownership.

Since there was a total failure of consideration (i.e., Mr. Divall never got legal ownership), he was
entitled to get his money back.

4) Jones v. Just (1868) LR 3 QB 197

Principle Involved: Caveat Emptor – buyer must examine goods; seller is not liable unless there's
fraud or misrepresentation.

Case: The buyer, Jones, purchased hemp from the seller, just, under the belief that it was suitable for
immediate use. However, the hemp was found to be damaged by sea water and not usable for the
intended purpose. The buyer argued that he should be compensated.
87
Judgment: The court held that the buyer had the opportunity to inspect the goods and no express
warranty was given by the seller. Hence, under the doctrine of Caveat Emptor, the buyer was
responsible for ensuring the quality and suitability of the goods before purchase.
 BUSINESS REGULATIONS

SELF ASSESSMENT QUESTIONS commerce, consumer protection, and

implied warranties.
 SHORT ANSWER
1. What is Constructive Delivery?
2. What is the meaning of Symbolic
Delivery?
3. What is Actual Delivery under the
Sale of Goods Act?
4. Who is an Unpaid Seller?
5. What is meant by Sale by Non-
Owners?
6. What do you understand by Sale by
Sample?
7. What is the meaning of Mercantile
Quality of goods?

 SHORT ESSAY
1. Explain the principle of Caveat
Emptor under the Sale of Goods Act,
1930. What are its exceptions as
recognized by law?
2. Discuss the concept of Sale by
Owner as per Section 27 of the Sale
of Goods Act. How does ownership
affect the validity of a sale?

 ESSAY
1. Explain the doctrine of Caveat
Emptor as laid down under the Sale
of Goods Act, 1930. Discuss its
relevance and application in the
modern business environment,
particularly in the context of e-

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CHAPTER-14

RULES AS TO DELIVERY OF GOODS –

UN PAID SELLER-RIGHTS.

Chapter Overview

 Delivery of Goods-Mode of delivery

 Unpaid Seller-Rights
 Butter and seller-Rights and Duties
 Auction sale-Rules
 Buyers and Sellers Remedies for breach of contract

Delivery refers to the process of (e.g., keys to a storage unit or a bill

transferring goods from the seller to the of lading).
buyer. The rules of delivery, which are
explained in Sections 33 to 39, provide 2. Section 34 – Effect of Part Delivery
guidelines on how and when this transfer
should take place to ensure a valid and If the seller delivers only part of the
proper delivery under the law. The rules of goods, it counts as full delivery only if
delivery are follows the part delivery is made as a step toward
delivering all the goods.
1. Section 33 – Mode of Delivery
If the part is delivered as a separate
Delivery can happen in different ways: transaction, it doesn’t count as delivery of
the whole.
 Actual delivery: Physically handing
over the goods (e.g., giving a book Example: If 10 bags of rice are sold and
directly to the buyer). the seller delivers 2 with a promise to
 Constructive delivery: No physical send the rest soon, it’s valid partial
movement, but control shifts (e.g., delivery. But if 2 are delivered with no
warehouse keeper agrees to hold intent to deliver more, it’s not full
goods for buyer). delivery.
 Symbolic delivery: Transfer of
something representing the goods 3. Section 35 – Buyer to Apply for
Delivery

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The seller is not obligated to deliver the correct goods and reject wrong
goods until the buyer asks (applies) for it. ones, Reject all.

Example: If goods are ready and the Example: Ordered 100 shirts, received
buyer does not come forward or apply 120 – buyer has options as above.
for delivery, the seller need not deliver
until asked. 7. Section 39 – Delivery by
Installments
4. Section 36 – Rules on Delivery
 Time and place Delivery can be in installments only if
 Delivery must be made at a agreed. If one installment is late or
reasonable hour (not at midnight defective, the buyer may, accept others
unless agreed). and reject the faulty one, or Cancel the
 If no location is mentioned, entire contract if the breach is serious
delivery happens at the seller’s (i.e., “goes to the root of the contract”).
business place or home if there’s 8. Section 40 – Delivery to Carrier
no business.
 Goods with third party: If goods If goods are handed over to a carrier
are held by someone else (e.g., a (e.g., courier, shipping company), it’s
warehouse), the buyer needs that considered as delivery to the buyer,
third party’s acknowledgment unless agreed otherwise.
before delivery is complete.
The seller should make a reasonable
contract with the carrier (protect the
5. Section 37 – Expenses of Delivery
goods), else the buyer can sue the seller
Seller’s responsibility: Cost of for loss/damage.
preparing goods for delivery (e.g.,
Unpaid Seller
packing).
Under Section 45 of the Indian Sale of
Buyer’s responsibility: Cost of receiving
Goods Act, 1930, an "unpaid seller" is
goods (e.g., transport to their home or
defined as a seller of goods is deemed to
factory).
be an unpaid seller:
6. Section 38 – Delivery of Wrong
1. When the whole of the price has not
Quantity
been paid or tendered; or
 Short delivery (less than agreed):
Buyer can reject all or accept 2. When a bill of exchange or other
what’s given and ask for damages. negotiable instrument has been received as
 Excess delivery (more than agreed) conditional payment and the condition on
:Buyer can accept the correct which it was received has not been
quantity and reject the rest, accept fulfilled.
all and pay for extras, reject
everything. Example: Noushad sells a television to
 Mixed goods: If different items are Shafeeq for ₹30,000. Shafeeq takes the
delivered, buyer can: Accept TV home and gives Noushad a post-dated
cheque for the amount.

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A few days later, when Noushad deposits Even though he accepted a cheque (a
the cheque in the bank, it bounces due to conditional payment), the condition that
insufficient funds. the cheque clears was not fulfilled.

In this case: Noushad is an unpaid seller

because the price has not been actually
paid.

Buyer and Seller

Duties of Buyer Duties of Seller

 To pay the agreed price  To deliver goods as agreed (time, place,
 To accept delivery of goods quality, quantity)
 To examine goods on delivery  To transfer good title to the buyer
 To ensure goods match the description or
sample

Rights of Buyer Rights of Seller

 To receive goods as per contract (correct  To receive payment as per contract
quantity, quality, and description)  To sue for non-payment or refusal to
 To reject goods if they don't conform to accept delivery
the contract  To retain goods until payment (right of
 To claim damages for breach of contract lien)

Rights of an unpaid Seller 1. When the property in the goods

has passed from the seller to the
These rights fall into two categories: buyer
Rights against the goods and Rights
against the buyer personally. 1. Right of Lien (Section 47–49)

A. Rights against goods (Section 46(1)) The seller who still has possession of the
goods can keep them until payment is
The right of an unpaid seller against the made.
goods can be discussed under two heads

1) When the property in the goods has

passed from the seller to the buyer. Only applies if: No credit was agreed.
2) When the property in goods has not The credit period has expired.
passed from seller to the buyer.
The buyer is insolvent.
This means the buyer is now the legal
owner, but has not paid the full price. In 2. Right of Stoppage in Transit (Section
such cases, the seller’s rights are: 50–52)

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If the goods are in transit and the buyer 3) Right to Sue for Interest and Special
becomes insolvent, the seller can stop the Damages (Section 61)
goods and regain possession. This ends
The seller may claim: Interest on the
once the goods are delivered to the buyer.
unpaid amount from the date it was due
3. Right of Resale (Section 54) (if agreed in the contract or permitted by
law).
The seller can resell the goods: If the
goods are perishable. After giving notice Special damages if the buyer’s breach
to the buyer. If the buyer doesn’t pay after caused further loss beyond the usual
such notice. measure of damages.

2. When the Property in the Goods Auction Sale

Has Not Passed to the Buyer
An auction sale is a public sale where
This means ownership is still with the goods, property, or services are sold to the
seller. In this case: highest bidder. In this process, an
auctioneer invites bids from participants,
1. Right to Withhold Delivery
and the item is sold to the person who
The seller can simply refuse to deliver offers the highest price. Auction sales are
the goods until payment is made, since commonly used for items like antiques,
the buyer doesn’t yet own the goods. artwork, real estate, and vehicles.

An auction sale is a public sale where

goods are sold to the highest bidder
2. Right of Resale through competitive bidding.
The seller can resell the goods after Bid: A bid is an offer made by a person to
giving proper notice if the buyer fails to buy the item being auctioned, usually
pay. stated as a price. It represents how much
the person is willing to pay for the item.
B. Rights Against the Buyer Personally
Bidder: A bidder is a person or entity who
1) Right to Sue for the Price (Section 55) makes a bid during the auction. They
If the ownership of the goods has passed compete with other bidders by offering
to the buyer and the buyer fails to pay, higher amounts in an attempt to win the
the seller can file a suit to recover the item.
price. Rules of Auction Sale (Section 64)
2) Right to Sue for Damages for Non-  Separate Contract for Each Lot
Acceptance (Section 56)
If goods are sold in lots, each lot is
If the buyer wrongfully refuses to accept treated as a separate contract of sale.
and pay for the goods, the seller can sue
for damages. The damages are usually  Sale is Complete on Fall of Hammer
calculated based on the difference
The sale is complete when the
between the contract price and the
auctioneer announces its completion,
market price at the time of breach.
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usually by the fall of the hammer or rare goods) and monetary damages
any customary manner. would not suffice.
 Rescission-The buyer can rescind
 Right to Bid May Be Reserved
(cancel) the contract, effectively
The seller may reserve the right to bid, returning the parties to their pre-
but this must be expressly notified contractual positions, and may
beforehand. recover any payments made under the
contract.
 Seller’s Right to Bid is Limited  Rejection of Goods-If the goods
If the right to bid is not reserved, delivered does not conform to the
neither the seller nor his agent can bid. contract (e.g., damaged, defective, or
If they do, the sale is voidable at the incorrect goods), the buyer has the
buyer's option. right to reject them and demand a
refund, repair, or replacement.
 Use of Pretended Bidding is  Restitution-The buyer may be
Fraudulent entitled to restitution, which means
they can recover any money or
Any pretended bidding to raise the
property given to the seller under the
price is considered fraudulent and
contract.
renders the sale voidable at the buyer's
B. SELLERS
option.
 Damages: The seller can claim
 Right to Reject Bid Before Completion damages for the loss caused by the
buyer’s failure to fulfill the
A bidder may retract their bid anytime contract.
before the fall of the hammer or  Specific Performance While less
announcement of sale completion. common, the seller can seek
 Reserve Price (Upset Price) specific performance from the
buyer to fulfill their obligations,
The auctioneer can refuse to sell the particularly in the case of unique
goods if the bidding does not reach a goods or real property.
minimum (reserve) price, if such price  Rescission: If the buyer has
is fixed. breached the contract, the seller
may rescind (cancel) the contract
Buyers and Sellers Remedies for Breach
and seek restitution.
of Contract
 Retention of Title: If the buyer has
A. BUYERS not paid for the goods, the seller
 The buyer can claim damages for the may have a right to retain
actual loss ownership of the goods until
 Specific performance-The buyer may payment is made (depending on the
seek a court order compelling the jurisdiction and terms of the
seller to fulfill the terms of the contract).
contract, particularly if the item or  Withholding Performance: The
service is unique (e.g., real estate or seller may withhold delivery of the
goods or services until the buyer

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has performed their part of the lawsuit to claim the contract price
contract, particularly in the case of of the goods.
a contract involving payment on
delivery.
 Action for the Price: If the buyer
refuses to pay or takes possession
of the goods, the seller can bring a

4. Bajaj Auto Ltd. v. TVS Motor Company Ltd. (20

Case: Bajaj Auto alleged that TVS Motor used its pa

CASE STUDIES launched motorcycle. The dispute included quality
infringement.
1) Varley v. Whipp (1900) 1 QB 513 Judgment: Though primarily a patent case, the judgm
comply with quality standards and buyers can se
CASE: Varley sold a reaping machine to Whipp, describing it as "new last year and only
conditions.
used for about 50-60 acres." Whipp had not seen the machine at the time of purchase. Upon
delivery, the machine was much older and had been heavily used.

Judgment: No. The court held that the machine did not correspond to the description
provided at the time of the contract. Whipp was entitled to reject it.

2. Mohan Lal v. Grain Chambers Ltd. (AIR 1950 All 291)

Case: Mohan Lal sold a consignment of goods to Grain Chambers Ltd., but full payment
was not received. Grain Chambers refused to either pay or return the goods.

Judgment: The Allahabad High Court held that Mohan Lal was entitled to lien and stoppage
under the Sale of Goods Act, as he had not been paid fully.

3. Hadley v. Baxendale (1854) 9 Exch 341

CASE: Hadley, a mill owner, sent a broken shaft through Baxendale (a carrier) for repairs.
Baxendale delayed the delivery. As a result, Hadley’s mill remained shut longer, and he lost
profits.

Judgment: The court ruled that since Baxendale wasn’t informed that delay would cause a
business loss, he was not liable for that loss.
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5. Payne v. Cave (1789) 3 Term Rep 148

Case: Payne, the auctioneer, received a bid from Cave for an item. Cave withdrew his bid
before the hammer fell to finalize the sale.

Judgment: The court said Cave could legally withdraw his bid before the hammer fell, since
the bid was just an offer.

SELF ASSESSMENT QUESTIONS

 SHORT ANSWER 1. Write a short essay on the remedies

1. What is meant by delivery of available to the buyer and seller in
goods in a contract of sale? case of a breach of contract under
2. What is the effect of part delivery the Sale of Goods Act, 1930.
under the Sale of Goods Act? 2. What do you mean by an auction
3. What are the types of expenses sale? Explain the importance and
involved in the delivery of goods? legal provisions relating to auction
4. Who is known as an unpaid seller sales.
under the Sale of Goods Act? 3. Write a brief note on the rights of
5. Mention any two rights of the an unpaid seller under the Sale of
buyer in a contract of sale. Goods Act. Support your answer
6. Mention any two rights of the with relevant sections.
seller in a contract of sale. 4. Explain the rules related to the
7. What is meant by an auction sale? delivery of goods in a contract of
8. State any two remedies available sale. Mention the types and legal
to the buyer for breach of contract. implications of delivery.
9. State any two remedies available
to the seller for breach of contract.  ESSAY
1. Discuss the importance of auction
 SHORT ESSAY sales in the present global business
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scenario. Explain how auction 3. Discuss the significance of

sales are governed under the Sale safeguarding the rights of buyers
of Goods Act, 1930, with emphasis and sellers in a contract of sale.
on their relevance in digital and Explain how these rights contribute
international commerce. to fair trade, consumer protection,
2. Explain in detail the rules relating and smooth commercial
to the delivery of goods under the transactions.
Sale of Goods Act, 1930. Highlight
the types of delivery and the legal
obligations of both buyer and seller
during delivery.

CHAPTER-15
CYBER LAW

Chapter overview
 Introduction to Indian Cyber Law- Features
 IT Act 2000- Objectives

Introduction to Indian Cyber Law meet certain authenticity and security

standards.
Cyber Law refers to the legal rules that
govern the use of the internet, computers, 2. Recognition of Digital Signatures
and digital communication in India. Digital signatures are legally valid
Indian cyber law, primarily governed under the IT Act, serving the same
by the Information Technology Act, 2000. purpose as physical signatures. They
It deals with legal issues arising from authenticate the origin and integrity of
the use of computers and the internet, digital messages or documents and are
including cybercrimes, e-commerce, and issued by licensed Certifying
digital signatures. Authorities. This ensures secure
electronic transactions.
Features of Indian Cyber Law
3. E-Governance
1. Legal Recognition to Electronic
The IT Act promotes e-
Records Governance by enabling government
The IT Act provides legal validity departments to use and accept
to electronic records such as contracts, electronic records and digital
agreements, invoices, and signatures. This includes offering
communications. This means that services like e-filing of taxes, online
digital documents are legally licenses, and digital certificates,
equivalent to paper documents with improving transparency and efficiency
handwritten signatures, provided they in public services.
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body ensures quick resolution of cyber

4. Certifying Authorities (CAs) disputes and offenses.
The Act empowers the Controller
of Certifying Authorities (CCA) to 8. Punishment for Cyber Offenses
license and regulate CAs who issue The Act clearly defines punishments
digital signature certificates. These for various offenses. For example:
authorities must comply with strict
standards to ensure trust and security  Hacking: Up to 3 years of
in digital transactions. imprisonment and/or a fine up to
₹5 lakh.
5. Cybercrimes and Their Penalties  Identity Theft: Up to 3 years
The law defines various cybercrimes imprisonment and/or a fine up to
such as: ₹1 lakh.
 Hacking (Section 66)  Cyber Terrorism: Life
 Data theft (Section 43) imprisonment.
 Cyber stalking and harassment
(Section 66A/B/E) 9. Promotion of E-Commerce
 Phishing and identity theft (Section Cyber Law facilitates e-commerce
66C/D) by giving legal validity to digital
 Cyber terrorism (Section 66F) transactions and contracts. It creates a
The Act also prescribes appropriate secure framework for online trade,
penalties, including fines and enabling businesses to operate
imprisonment, depending on the offense's confidently in the digital space. This
severity. has boosted India's digital
6. Protection of Privacy and Data economy significantly.
The IT Act includes provisions to Information Technology Act, 2000 (IT
safeguard sensitive personal data. Act, 2000)
Organizations must follow due The Information Technology Act,
procedures while collecting, storing, 2000 is India's first law to deal with
and processing personal information. electronic commerce, cybercrimes, and
Any negligence resulting in data digital communication.
breaches can lead to legal
consequences. Objective of the IT Act, 2000

7. Cyber Appellate Tribunal (Now ● To provide legal recognition to

electronic documents and
Merged with TDSAT)
transactions.
Originally, the Act set up a Cyber ● To facilitate electronic filing of
Appellate Tribunal to resolve disputes documents with government
arising under the IT Act. However, its agencies.
functions were later merged with the ● To curb and punish cyber crimes
Telecom Disputes Settlement and like hacking, identity theft, cyber
Appellate Tribunal (TDSAT). This stalking, and online fraud.

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● To ensure the security of electronic SELF ASSESSMENT QUESTIONS

records and communications.

 SHORT ANSWER
Important Amendments:
1. What is cyber law?
2. What are the objectives of the IT
In 2008, the IT Act was amended to Act 2000?
introduce new crimes like cyber terrorism,
identity theft, child pornography, and to  SHORT ESSAY
strengthen data protection rules. 1. Explain the features of Indian cyber
law?

CHAPTER-16
E- COMMERCE

Chapter overview
 E-commerce - meaning - definition - features - Advantages and disadvantages
 Digital signature- meaning -definition -working-uses- advantages and
limitations
 Electronic contract - features

E-Commerce Features of E-Commerce:

E-commerce (electronic commerce)  Global Reach: Businesses can access

refers to the buying and selling of goods customers worldwide.
and services over the internet. It involves  24/7 Availability: Services are
online transactions where businesses and available anytime, eliminating time
consumers interact digitally without barriers.
physical contact.  Electronic Transactions: Payments and
orders are processed digitally.
Definition  Interactive and Customized
According to Kalakota and Whinston Communication: Personalized
“E-commerce is the buying and selling of marketing and customer interaction.
information, products, and services via  Cost-Effectiveness: Reduces
computer networks.” operational and transactional costs.

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 Automation: Order processing, billing,

inventory management, etc., are Delivery Issues: Delays, damaged
automated. goods, or logistical problems.

Legal and Taxation Issues:

 Variety of Goods and Services: Wide Complex international laws and tax
range of products offered online. regulations.
 Security and Privacy: Use of
encryption and secure networks to Technological Challenges: Need
protect data. for constant updates and cyber
security measures.
Advantages of E-Commerce
Customer Trust: Building trust in
o Convenience: Customers can shop online transactions can be
from anywhere, anytime. challenging.
o Wider Market Reach: Businesses
can sell globally, expanding their Digital Signature
customer base.
o Lower Costs: Reduced need for A digital signature is a type of
physical stores, less manpower. electronic signature that uses
o Faster Transactions: Quick cryptographic techniques to provide
payment and order processing. authenticity, integrity, and non-repudiation
o Variety and Comparison: Easy for to digital messages or documents.
customers to compare products and
prices. A digital signature acts like a virtual
o Better Customer Insights: Data fingerprint or seal, uniquely identifying the
analytics help understand customer sender and securing the content.
preferences.
o Improved Supply Chain According to Information Technology Act,
Management: Efficient inventory 2000 (India)
and delivery systems. “Digital Signature means
authentication of any electronic record by
Limitations of E-Commerce: a subscriber by means of an electronic
method or procedure in accordance with
Security Concerns: Risk of the provisions of the Act.”
hacking, data theft, and online
fraud.
Lack of Personal Touch: No Working of Digital signature
physical interaction, which some 1. Creating a Hash: The data
customers prefer. (document/message) is first passed
through a hash function to create a
Dependence on Internet Access: unique code (digest).
Requires a stable internet
connection.
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2. Encrypting the Hash: The hash is

encrypted using the sender’s private 6. E-Governance
key. This encrypted hash becomes Used in digital forms, government
the digital signature. tenders (e-tendering), and online
registrations.
3. Sending the Message: The original
data along with the digital signature 7. Software Distribution
is sent to the receiver. To ensure that software packages or
updates are from trusted developers
4. Verification: The receiver decrypts and haven't been tampered with.
the digital signature using the
sender’s public key and matches the Advantages of Digital Signatures
hash with the hash of the received
data. If both hashes match, the ● Speed up the signing process (no
signature is verified. need for physical presence).
● Reduce paperwork and costs.
● Enhance security and trust.
Uses of Digital Signature ● Comply with legal requirements
(recognized in many countries).
1. Authentication
Authentication through a digital Limitations of Digital Signatures:
signature means verifying the identity
of the person or organization that has ● Require a Public Key Infrastructure
signed the document or message. (PKI), which can be complex.
● Private keys must be securely
2. Data Integrity stored; if compromised, signatures
Ensures that the content has not been can be faked.
altered after signing. ● May not be recognized legally in
every jurisdiction for every type of
3. Non-Repudiation document.
Prevents the sender from denying that ● Technology dependency: Not all
they signed the document. users or systems may be
compatible.
4. Secure Online Transactions
Used in banking, e-commerce, and Electronic contract
financial services for secure An Electronic Contract (or E-Contract)
transactions. is a legal agreement created and signed
electronically, usually over the internet.
5. Filing Tax Returns and Legal An Electronic Contract is a contract
Documents that is created, executed, and signed in
In India, filing Income Tax Returns digital form, without the need for physical
(ITR) and Goods and Services Tax paper or signatures.
(GST) returns often requires a digital Examples: Booking a movie ticket online,
signature.

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Purchasing items from an e-commerce 4. Instant Communication: Offers and

website. acceptances can be communicated
instantly.

Features of Electronic Contracts: 5. Global Reach: Can be entered into

from any part of the world.
1. Paperless: No physical documents are
involved. Legal Recognition in India

2. Digital Signature: It is authenticated Under the Information Technology Act,

using digital signatures or click-wrap 2000, electronic contracts are legally valid
agreements (like clicking “I Agree”). if:

3. Legally Valid: E-contracts are legally ● There is a valid offer and acceptance.
enforceable under the Information ● There is lawful consideration.
Technology Act, 2000 in India. ● Both parties are competent to
contract.
● The contract is not for an illegal
purpose.

CASE STUDIES

1. Trimex International FZE Ltd. v. Vedanta Aluminium Ltd. (2010) 3 SCC 1

Title: Formation of E-Contract

Legal Concept: Validity of e-contract
Facts: Emails were exchanged regarding supply of materials. One party denied the existence of a
contract since no formal document was signed. Are emails legally binding?

Decision: Supreme Court held that email exchanges can form a valid contract if terms are clear and
agreed upon.

Learning Point: E-contracts (via email or website) are valid under the Indian Contract Act if there is
offer, acceptance, and consideration.

2. Misrepresentation in Online Sale – Flipkart Seller Incident

Legal Concept: Consumer Protection, Misrepresentation

Facts: A buyer ordered a branded laptop from an online seller through Flipkart. Upon delivery, it
was found to be a duplicate product. Can the buyer claim refund and damages?

Action: Buyer filed a complaint under the Consumer Protection Act.

Decision: Consumer forum directed full refund and penalty, citing defective product and
misrepresentation.
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Learning Point: E-commerce buyers have consumer rights and can file complaints for fraud or
misrepresentation.
 BUSINESS REGULATIONS

3. PNB v. Data Theft Accused (2006)

Title: Fraudulent Digital Signature Use

Issue: Misuse of digital signature

Facts: An employee of Punjab National Bank used another officer’s Digital Signature Certificate
(DSC) to transfer money fraudulently.

Decision: The court held the employee guilty under Sections 66 and 72 of IT Act, recognizing that
unauthorized use of a digital signature is a cybercrime.

Learning Point: Protecting access to DSC is legally critical; unauthorized use is punishable.

SELF ASSESSMENT QUESTIONS

 SHORT ANSWER
1. What is e-commerce?
2. Describe digital signature
3. What is electronic contract

 SHORT ESSAY
1. Explain advantages and limitations
of e-commerce
2. Evaluate the working of digital
signature
3. Analyse the uses of digital
signature
4. Explain features of electronic
contract

 ESSAY
1. Explain advantages and
disadvantages of digital signature
2. What is e-commerce? Briefly
explain its features

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CHAPTER-17
CYBERSPACE

Chapter overview
 Cyberspace - Importance - components
 Cybercrime - major cyber crimes- preventive techniques

The word cyberspace have been ● Enables instant messaging, emails,

coined by author William Gibson in his video calls, etc.
science-fiction novel ‘Neuromancer’, ● Connects users from all over the
written in 1984, world.
Cyberspace is a global networked ● Facilitates e-commerce and online
environment where people interact, business.
communicate, and share information ● Supports digital communication and
through computers and the internet. collaboration.
● Enables distance learning and online
The term cyber or cyberspace has today education.
come to signify everything related to ● Essential for cyber law and digital
computers, the Internet, websites, data, security.
emails, networks, software, data storage
devices and even electronic devices such Components of Cyberspace
as mobile phones, ATM machines etc.

Importance of Cyberspace

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1. Internet Infrastructure: Routers,  Spreading Malware or Viruses

servers, data centers, cables, and
satellites that support digital 1. HACKING
communication. Hacking refers to the act of exploiting
2. Networks: LANs (Local Area weaknesses or vulnerabilities in a system,
Networks), WANs (Wide Area network, or device to gain unauthorized
Networks), and the internet itself. access, control, or information.
3. Digital Devices: Computers, smart
phones, tablets, and IoT (Internet of While the term is often associated with
Things) devices. illegal or malicious activities, not all
4. Software & Applications: Browsers, hacking is harmful some forms are ethical
email clients, social media platforms, and intended to improve security.
e-commerce systems.
5. Users: Individuals, businesses, Consequences of Hacking
governments, and organizations using
o For Individuals: Identity theft,
cyberspace.
financial loss, invasion of privacy.
o For Organizations: Data breaches,
Cybercrime
reputational damage, legal
Cybercrime is any criminal activity penalties, financial loss.
that involves a computer, network, or o For Nations: Threats to national
digital device as a tool, target, or both.
security, economic disruptions, and
diplomatic conflicts.
Cybercrime refers to illegal activities
that are carried out using computers,
Preventing Hacking
digital devices, or the internet.
These crimes are committed in
● Use strong, unique passwords and
cyberspace and often involve the theft or
enable two-factor authentication.
misuse of data, money, or personal
● Keep software and systems
information.
updated with security patches.
● Educate users about phishing and
Major Cyber crimes
social engineering tactics.
The major cyber crimes under the ITA as ● Employ firewalls, antivirus
amended by the ITAA are as follows software, and intrusion detection
systems.
 Hacking ● Regularly back up important data
 Data Theft and perform security audits.
 Identity Theft
 E-mail spoofing
 Cyber stalking and cyber Types of Hacking
bullying
 Phishing and Vishing  Ethical Hacking (White Hat)
 Cyber terrorism It is Authorized and legal hacking
 Obscenity and Child to find and fix security vulnerabilities.
Pornography
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 Black Hat Hacking o Protect Online Accounts: Use strong,

Unauthorized access for malicious unique passwords and enable two-
purposes such as stealing data, factor authentication. Avoid using
spreading viruses, or disrupting public Wi-Fi for financial
services. It is Illegal and Considered transactions.
criminal activity in most jurisdictions. o Monitor Financial Activity: Regularly
check bank statements and credit
 Grey Hat Hacking reports.
It falls between white and black Sign up for fraud alerts from your
hat; may violate laws or ethical bank or credit bureau.
standards but without malicious intent. o Be Cautious with Emails and Links :
Avoid clicking on suspicious links or
Example: Finding and exposing downloading unknown attachments.
vulnerabilities without permission but o Limit Sharing Personal Information
not exploiting them for personal gain. on Social Media: Do not reveal details
like your birthday, address, or
mother’s maiden name.

2. DATA THEFT
It refers to the unauthorized copying, 4. E-MAIL SPOOFING
transfer, or retrieval of data from a system Email spoofing is a technique used by
or device without the owner’s consent. It is attackers to send emails that appear to
a form of cybercrime that targets sensitive come from a trusted or legitimate source
or confidential information such as when, in fact, they are not.
personal details, financial records,
intellectual property, or trade secrets. The goal is to deceive the recipient into
believing the message is authentic, often to
steal sensitive information, spread
3. IDENTITY THEFT malware, or carry out scams.
Identity theft is a form of cybercrime
Preventing Email Spoofing
where someone illegally obtains and uses
another person's personal information—
For Individuals:
such as name, address, Social Security
● Check sender details carefully
number, or financial details—without their
(hover over the "From" address).
permission, usually for financial gain or
● Do not click suspicious links or
fraud.
download attachments.
● Enable spam filters and keep
antivirus software updated.
Preventing Identity Theft
● Use email authentication, like
verifying DKIM signatures (in
o Secure Personal Information: Shred
some clients).
documents with personal data before
disposing of them. Lock up sensitive
For Organizations:
records.
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● Implement SPF (Sender Policy

Framework): To Verify sender IPs. 6. PHISHING AND VISHING
● Use DKIM (Domain Keys Phishing and Vishing are both forms of
Identified Mail): Ensures message social engineering attacks, where
integrity. cybercriminals manipulate people into
● Enable DMARC (Domain-based giving away confidential information. The
Message Authentication, Reporting key difference lies in the medium used to
& Conformance): Combines SPF carry out the scam.
and DKIM to protect domains from
spoofing. Phishing
● Employee training to recognize
Phishing is a cyber attack where
spoofed or phishing emails.
fake emails, messages, or websites are
● Monitor and analyze email traffic
used to trick individuals into revealing
for unusual patterns.
sensitive information such as passwords,
credit card numbers, or login credentials.
5. CYBER STALKING AND CYBER
BULLYING How It Works: Attackers send emails or
Both cyber stalking and cyber bullying messages pretending to be from trusted
are forms of online harassment that use sources (banks, companies, government
digital platforms to intimidate, threaten, or agencies).Victims are lured into clicking
harm individuals. Though related, they malicious links or downloading infected
differ in nature, intent, and often in the attachments. A fake login page may steal
target audience. credentials entered by the user.
Cyber stalking is the repeated use of the
internet, email, or other electronic Vishing (Voice Phishing)
communication to harass, threaten, or stalk Vishing is a type of phishing attack
an individual. It is often obsessive and conducted through voice calls or phone
persistent. messages instead of emails.
Cyber bullying is the act of using digital
communication tools to bully, harass, or How It Works: The attacker calls
humiliate someone, especially common pretending to be a bank officer, tech
among children and teenagers. support agent, police officer, etc. They try
to convince the victim to share OTPs,
Preventive Measures account numbers, or card details. Some
Vishing calls use robocalls or caller ID
● Don’t share personal information spoofing to appear legitimate.
publicly. Prevention
● Block and report harassers. ● Verify the source: Never trust
● Use strong privacy settings on all unsolicited emails or calls asking
online platforms. for sensitive data.
● Keep evidence (screenshots, ● Do not share OTPs or passwords
messages) for legal support. with anyone over the phone or
● Inform parents, teachers, or email.
authorities if you are a victim.
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● Look for signs of spoofing: Includes videos, images, animations,

Mismatched URLs, poor grammar, and digitally altered material. Section 67,
or urgency. 67A, and 67B of the IT Act: Prohibit
● Use two-factor authentication for all publishing or transmitting obscene
important accounts. material and child pornography.
● Report Phishing and Vishing to
your bank or cybercrime cell. POCSO Act (Protection of Children from
Sexual Offences): Specifically addresses
child sexual abuse.
7. CYBER TERRORISM
Cyber terrorism refers to the use of the
internet and digital technologies to 9. SPREADING MALWARE OR
conduct violent acts that threaten or cause VIRUSES
harm to national security, infrastructure, or This involves the deliberate creation or
civilian life with political, religious, or distribution of malicious software
ideological motivations. (malware) such as viruses, worms,
Trojans, ransom ware, or spyware to
damage, steal, or manipulate data.
8. OBSCENITY AND CHILD It Happens through email attachments,
PORNOGRAPHY infected software downloads, or malicious
This refers to the creation, distribution, websites. Often disguised as legitimate
sharing, or possession of sexually explicit files or links.
content involving adults (obscenity) or
minors (child pornography). Child Types of Malware:
pornography is illegal and considered a
severe crime globally. ● Viruses: Replicate themselves and
spread to other files.
Obscenity is posting or circulating ● Worms: Spread across networks
obscene content or messages online. automatically.
Sending unsolicited sexual material via ● Trojans: Disguised as useful
email or messaging apps. programs but cause harm.
● Ransom ware: Locks data and
Child Pornography demands payment to release it.
Any visual depiction of sexually explicit ● Spyware: Secretly gathers user
conduct involving a minor (under 18 information.
years).

CASE STUDIES

1. The WannaCry Ransomware Attack (Global) 2017, the WannaCry

Title: Type of Cybercrime: Malware, Ransomware
Ransom ware affected more than 200,000 computers in 150 countries, including India. It encrypted
files and demanded ransom payments in Bitcoin.
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Outcome: Major operations were halted, including services at Indian hospitals. Security agencies
advised immediate patching and backups.
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2. Obscenity and Child Pornography Crackdown

Title: Obscenity, Child Pornography

Case: In 2019, Indian cybercrime units busted a major child pornography racket on social media.
Several individuals were arrested for uploading and distributing obscene and illegal content.

Outcome: Strict enforcement of IT Act Sections 67, 67A, 67B and POCSO Act. ISPs were
instructed to monitor and report such content.

3. Pune Techie's Social Media Impersonation

Title: Identity Theft, Cyber stalking

Case: A Pune-based software engineer found her identity being misused on Face book and
Instagram, where someone created fake profiles using her photos and sent obscene messages to her
friends.

Outcome: The cybercrime cell traced the IP address and arrested a former colleague who did it out
of revenge. Charges were filed under IT Act Sections 66C, 66D, and IPC Section 509.

SELF ASSESSMENT QUESTIONS  SHORT ANSWER

1. Explain the importance of
 SHORT ANSWER cyberspace in modern society.
1. Define cyberspace. 2. Describe any three major types of
2. List any four components of cybercrimes.
cyberspace. 3. Write a short note on cyber stalking
3. What is email spoofing? and cyber bullying.
4. What is the main difference 4. Describe how you would protect
between phishing and Vishing? your personal information online
5. How can strong passwords prevent
cybercrimes?  ESSAY
6. Identify the key difference between 1. Discuss the key components of
black hat and white hat hackers. cyberspace with examples.

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2. Explain the various types of

cybercrimes under the IT Act.
3. Apply the concept of ethical hacking
to a real-world security scenario.

CHAPTER-18
PENALTIES AND OFFENCES

Chapter overview
 Penalties and Offences Section under IT Act, 2000

OFFENCE the context of cyber law, they refer to

An offence is any act or omission illegal activities involving computers,
that is prohibited by law and is punishable. networks, or digital data.
In simpler terms, it's a crime or illegal A penalty is the punishment or
activity defined under legal statutes. consequence imposed by law for
Offences can be civil or criminal, and in committing an offence.

Penalties and Offences Section under IT Act, 2000

Section Offence Penalty or punishment

Imprisonment up to three years, or with
Tampering with Computer source fine which may extend up to two lakh
Sec.65 documents rupees, or with both

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Computer related offences (Hacking

Imprisonment upto 3 years or fine
Sec. 66 with Computer systems, Data
upto Rs 5 lakh or both
alteration etc)

Dishonestly receiving the stolen

computer resource and communication Imprisonment upto 3 years or fine
Sec 66B device upto Rs. 1 lakh

Imprisonment for a term which may extend

to three years and shall also be liable to
Sec.66C Fraudulent use of electronic signature
fine which may extend to rupees one lakh

Cheating by person by using computer

Imprisonment upto 3 years and fine
resource or
Sec.66 D communication device
upto Rs. 1 lakh

Imprisonment which may extend to three

Sec.66E Publishing obscene images years or with fine not exceeding two
lakh rupees, or with both

Imprisonment which may extend to

Sec.66F Cyber terrorism imprisonment for life

Upon 1st conviction with

imprisonment upto 3 years and fine
Publishing or transmitting obscene upto Rs 5 lakh; and upon 2nd or
Sec.67 material in e-form subsequent conviction with
imprisonment upto 5 years and fine
upto Rs 10 lakh.

Upon 1st conviction with

Publishing or transmitting material imprisonment upto 5 years and fine
containing sexually explicit act in e- upto Rs 10 lakh; and upon 2nd or
Sec.67A form subsequent conviction with
imprisonment upto 7 years and fine
Upto Rs 10 lakh.

Imprisonment for a term which may extend

to five years and with a fine which may
extend to ten lakh rupees and in the event
Publishing or transmitting material of second or subsequent conviction with
Sec.67B depicting children in sexually explicit imprisonment of either description for a
act etc. term which may extend to seven years
and also with fine which may extend to
ten lakh rupee

Violating the directions to preserve and

Imprisonment upto 3 years and fine
Sec.67C retain the information by intermediaries

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Violating the directions of

Imprisonment upto 2 years or fine
Controller by Certifying Authority or
Sec.68 his employee
upto Rs 1 lakh or both

Violating the directions of the

Central Government or State
Government to a subscriber to extend Imprisonment upto 7 years and fine
Sec 69 facilities to decrypt
information

Violating the directions to block any

Imprisonment upto 7 years and fine
Sec.69A information for access by the public

Violating the directions to monitor and

Sec.69 B collect traffic data or information Imprisonment upto 3 years and fine

Imprisonment for a term which may extend

Unauthorized access to protected
Sec.70 system
to ten years and shall also be liable to
fine

Violating the directions of the

Imprisonment upto 1 years or fine
Indian Computer Emergency
Sec.70B Response Team (CERT-IN)
upto Rs 1 lakh or both

Misrepresentation to the Controller or

Imprisonment for a term which may extend
the Certifying Authority for obtaining
Sec.71 license or Electronic Signature
to two years, or with fine which may
extend to one lakh rupees, or with both.
Certificate

Penalty for breach of Imprisonment upto 2 years or fine

Sec.72 confidentiality and privacy upto Rs 1 lakh or both

Sec.72 A Disclosure of information in breach Imprisonment upto 3 years or fine upto Rs 5

of contract lakh or both Up

Sec.73 Penalty for publishing electronic Imprisonment upto 2 years or fine

signature certificate false in certain upto Rs 1 lakh or both
particulars

Sec.74 Publication for fraudulent purpose Imprisonment upto 2 years or fine

upto Rs 1 lakh or both

SELF ASSESSMENT QUESTIONS

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 ESSAY
1. Explain Penalties and Offences
Section under IT Act, 2000

CHAPTER-19

INVESTIGATION AND ADJUDICATION UNDER THE

INFORMATION TECHNOLOGY ACT, 2000

Chapter overview
 Investigation under the IT Act, 2000
 Adjudication under the IT Act, 2000
 IPR- Types -purpose- importance - challenges

The Information Technology (IT) Investigation under the Information

Act, 2000 is the cornerstone of India's Technology (IT) Act, 2000 refers to the
legal framework for addressing legal and procedural process carried out by
cybercrimes and regulating electronic authorized law enforcement agencies to
commerce and digital data. detect, gather evidence, and prosecute
With the rapid growth of internet usage, cybercrimes and violations defined under
the Act provides mechanisms not only to the Act.
define and penalize cybercrimes but also
to ensure a proper process for investigation a) Role of Law Enforcement Agencies
and adjudication.
Investigation of cybercrimes begins
1. Investigation under the IT Act, 2000 when a complaint is lodged either by a

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victim or a related authority. The police a) Adjudicating Officer (Section 46)

or other law enforcement agencies, such
as cybercrime cells, are responsible for The Central Government appoints
investigating offenses under the IT Act. Adjudicating Officers (AOs) to handle
These agencies collect digital evidence, contraventions under the IT Act
question suspects, and may seize devices involving damage or loss of less than Rs.
like computers or mobile phones. 5 crore. Typically, these are officers not
below the rank of a Director in the
Central Government.
b) Power of Investigation (Section 78)
Duties of Adjudicating Officer:
Section 78 of the IT Act authorizes ● Conduct inquiry and investigations
police officers not below the rank of into cyber offenses.
Inspector to investigate any offense ● Issue summons, examine
under the Act. This provision ensures witnesses, and review evidence.
that investigations are handled by ● Impose penalties or compensation.
experienced and competent officers.

c) Digital Evidence and Forensics b) Jurisdiction and Powers

Given the nature of cybercrimes, The Adjudicating Officer has civil court
electronic evidence plays a central role. powers, such as
Investigators use cyber forensics to ● Enforcing attendance of witnesses
retrieve data from computers, networks, ● Compelling production of
and mobile devices. The Indian Evidence documents
Act, 1872 was amended to include digital ● Receiving evidence on affidavit
evidence, which is now admissible in ● Issuing commissions for
court if collected properly. examination

d) Assistance from CERT-In c) Compensation and Penalties

The Indian Computer Emergency Under the Act, victims of cyber

Response Team (CERT-In), established offenses like hacking, data theft, or
under Section 70B, helps in investigating privacy breaches can seek compensation.
large-scale cyber incidents such as AOs can impose fines up to Rs. 1 crore
hacking, malware attacks, and denial-of- per contravention, depending on the
service attacks. It collaborates with law nature and impact of the violation.
enforcement and government agencies.
2. Adjudication under the IT Act, 2000 3. Cyber Appellate Tribunal (Now
Merged with TDSAT)
Adjudication refers to the legal process
of resolving disputes or determining Originally, appeals against the
penalties for violations under the Act. Adjudicating Officer’s decisions could be
made to the Cyber Appellate Tribunal

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(CAT). However, in 2017, the CAT was software code. The duration is life of the
merged with the Telecom Disputes author + 60 years (in India)
Settlement and Appellate Tribunal
(TDSAT). Example: Books, songs, films, paintings,
software
4. Role of Judiciary
2) Trademark
For serious cybercrimes like cyber
terrorism, child pornography, or hacking It is used to protect Words, logos, slogans,
involving amounts over Rs. 5 crore, the brand names and to distinguish
matter is dealt with by Judicial Magistrates goods/services of one company from
or Sessions Courts. These crimes often fall another
under both the IT Act and the Indian Penal The duration is 10 years and then it can
Code (IPC), and require trial under the renewable
Code of Criminal Procedure (CrPC). Example: McDonald's "I'm Lovin' It"

3) Patent
Intellectual Property Rights (IPR)
It is used to protect new inventions or
Intellectual Property Rights (IPR) processes. It must be novel, non-obvious,
are the legal rights given to individuals or and useful. The duration is 20 years from
organizations for creations of the mind, filing
such as inventions, literary and artistic Example: Pharmaceuticals, machines, new
works, designs, symbols, names, and technology
images.
4) Industrial Designs
Purpose
● To encourage creativity and It is used to protect Aesthetic/visual design
innovation of objects. The duration is of 10 years,
● To protect creators' economic and extendable to 15
moral rights
● To promote fair competition in Example: Bottle shapes (Coca-Cola),
business and trade phone designs
Types of Creations Protected
● Inventions
● Artistic and literary works 5) Geographical Indications (GIs)
● Brand names and logos
● Software and digital content It is used to protect products that originate
● Designs and patterns from a specific region and have qualities
Types of Intellectual Property Rights due to that region. The duration: 10 years,
renewable
1) Copyright
It is used to protect Literary, artistic, Examples: Darjeeling Tea, Mysore Silk,
musical, and dramatic works; also Banarasi Saree

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● Piracy and Counterfeiting

Importance of IPR ● Digital infringement (unauthorized
downloads)
● Encourages innovation and ● Lack of awareness in developing
creativity countries
● Protects creators from ● Lengthy legal processes and high
unauthorized use cost of enforcement
● Contributes to economic
development IPR in India is governed by multiple laws:
● Attracts investment in research and
development ● Copyright Act, 1957
● Builds brand value and customer ● Patent Act, 1970
trust ● Trademarks Act, 1999
● Designs Act, 2000
Challenges in IPR ● GI of Goods Act, 1999

CASE STUDIES

1. Case: Yahoo! Inc. v. Akash Arora (1999)

Title: IPR - Trademark – Domain Name Dispute

Facts: Akash Arora registered a website domain “yahooindia.com” which closely resembled
Yahoo’s brand.

Judgment: Delhi High Court held this as passing off and ordered Akash Arora to stop using the
domain.

Principle: Domain names can have trademark value; imitation causes confusion = infringement.
Learning: Brand names in digital space are also protected.

SELF ASSESSMENT QUESTIONS

 SHORT ESSAY
1. Explain the duties and powers of
 SHORT ANSWER adjudicating officer
1. Who is an adjudicating officer? 2. Analyse investigation under IT Act
2. What is IPR? 2000
3. List out types of IPR 3. Briefly explain types of IPR
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 ESSAY
1. Explain importance and challenges of
IPR

OPEN-ENDED MODULE
Divide students into groups and
Course Title: Business Regulations assign a specific case study related to
consumer regulations or environmental
Course Objectives: regulations. Ask them to analyze the case,
● To develop understanding of the identify key issues, and present their
legal environment of business in findings.
India.
● To impart knowledge of key Activity II
provisions of business laws
Visit to a local court or consumer forum
including the Indian Contract Act,
Sale of Goods Act, IT Act and Objective:
others. To provide students with first-hand
● To enable students to apply legal exposure to legal procedures, courtroom
principles in real-world business decorum, and the practical application of
situations. business and commercial laws.
● Develop legal reasoning, public
speaking, and teamwork skills  Pre-Visit Preparation:

Activity I ● Briefing session on court structure

and key legal terms (judge,
Case Study Discussions advocate, FIR, trial, bail, evidence,
etc.)

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● Distribute observation sheets with 1. Background Research (Individual

guiding questions /Group):

● Form small groups for better ● Assign students to briefly research

management and focused learning the speaker’s professional
background and the topic
● Prepare 3–5 questions in advance
During the Visit to ask during the session.
● Ask students to revise relevant
Students should observe and take notes on topics from the textbook related to
the following: the guest lecture theme.

1. Types of cases being heard (civil, During the Lecture:

criminal, consumer-related, etc.)
1. Observation & Note-Taking:
2. Courtroom roles (judge, lawyers,
Distribute a Guest Lecture Observation
clerks, witnesses, etc.)
Sheet with prompts like: Key legal
3. Language and decorum used in court
concepts discussed, Real-life examples
proceedings
/case studies mentioned, new insights
4. Business-related cases, if any (e.g.,
gained, Questions raised by peers or
contract disputes, company matters,
the speaker
consumer complaints)
5. Case flow – how a hearing is
Post-Lecture Activities:
conducted
1. Reflective Assignment (Individual):

 Post-Visit Activities: Write a 500-word reflection on:

Reflective Report (Individual):
“What I Learned from the Guest Lecture”
Summary of proceedings observed.
Any one interesting case explained in Activity IV
student's own words How the Indian legal
system functions practically. Legal Mock Trials
concepts from the syllabus seen in action Conduct a mock trial where students
(e.g., breach of contract, consumer rights, play the roles of judges, lawyers, and
etc.) witnesses. Use real-life cases related to
business regulations to simulate the trial
Activity III process.
Guest Lectures
What is a Mock Trial?
Invite industry experts or regulatory
A mock trial is a simulated court
body representatives to discuss real-world
trial where students take on roles such as
applications of business regulations
judge, lawyers, plaintiff, defendant, and
Pre-Lecture Work:
witnesses.

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It involves: A fictional or real legal case, a ● Opening statements

scripted or semi-scripted scenario, ● Presentation of evidence
presentation of arguments, examination of ● Witness examination and cross-
witnesses, and judicial ruling examination
● Closing arguments
Structure of the Mock Trial Activity ● Judge’s ruling or jury’s verdict

1. Case Selection 5. Debriefing Session

● Choose a relatable case scenario, Reflect on:
example: A breach of contract ● Legal principles applied
between two businesses, a ● Strength of arguments
consumer complaint against a ● Courtroom decorum
defective product ● What could be improved

Assessment Criteria:
2. Role Allocation ● Understanding of relevant law
Assign students to the following roles: ● Quality of legal arguments
● Judge ● Team coordination and preparation
● Plaintiff and Defendant ● Role play realism and
● Advocates (Prosecution & professionalism
Defense) ● Reflective report or oral
● Witnesses presentation post-trial
● Court clerk / Reporter
● Jury (optional) Activity V
Group Debates
Organize debates on topics like
3. Preparation Phase (1–2 weeks) Choose relevant, debatable topics from the
Guide students to: syllabus. Examples include:

● Read the case file

 Contract Law:
● Research relevant laws
“Standard form contracts are biased
● Prepare opening/closing statements
against consumers.”
and witness questions
● Provide templates or rubrics for
 Consumer Protection:
legal documents (complaints,
“E-commerce platforms should be held
affidavits, evidence summaries)
fully liable for counterfeit goods sold
on their sites.”

4. Mock Trial Day

 Company Law:
“Corporate Social Responsibility
Set up a classroom to resemble a
(CSR) should be voluntary, not
courtroom
mandatory.”
 Environmental Law:
Follow a basic trial structure:
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“Strict environmental regulations

hinder business growth.”

 Digital Laws:
“Data privacy laws are sufficient to
protect consumers in India.”

After group discussion, prepare a brief

report on what was learned.

MODEL QUESTION PAPER

QP Code: Name:
Register No:

THIRD SEMESTER (CUFYUGP) DEGREE EXAMINATION

B.Com
(COM3CJ201) - Business Regulations
2024 Admission onwards
Time: 2 Hours Marks: 70

Section A
All Questions can be answered. Each Question carries 3 marks (Ceiling: 24 Marks)

1. Define offer. Why is it important for a contract?

2. Explain the significance of electronic signature
3. Discuss the persons disqualified by law and are not competent to enter into contract
4. What is meant by discharge by waiver?
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5. Describe ‘suit upon quantum meruit’

6. What is pledge?
7. Define contract for sale of goods?
8. Name the persons involved in a contract of guarantee?
9. Give the meaning of future consideration
10. What is an unfair trade practice?

Section B
All Questions can be answered. Each Question carries 6 marks (Ceiling: 36 Marks)

11. Differentiate between coercion and undue influence

12. Explain wagering agreement
13. Elaborate the legal rules regarding consideration
14. Discuss how a contract is discharged
15. What are the challenges in the IT Act?
16. Explain the implied conditions
17. What do you understand by capacity of contact? Who are not considered competent to
enter into a contract?
18. Explain the exceptions to the doctrine of caveat emptor

Section C
Answer any ONE .Each Question carries 10 marks (1x10=10 Marks)

19. Discuss the essential elements of a valid contract

20. Ajith buys a laptop from an electronics store, and the salesperson assures him its
waterproof. However, when Ajith accidentally spills water on it, the laptop gets
damaged. Can Ajith claim damages under the Sale of Goods Act?
a) Analyze the relevant sections of the Sale of Goods Act applicable this case study.
b) Determine the rights and liabilities of the buyer and seller in each scenario.
c) Consider the potential outcomes and remedies available to the parties involved?

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SYLLABUS
MODULE UNIT CONTENT HRS
Introduction to Business Regulations 15
1 Definition and importance of Business Regulations-Business Law 1
Indian Contract Act, 1872- Contract - Definition - Essentials of valid
2
contracts- Classification of contracts
3
Offer and Acceptance - Consideration - Capacity to contract - Free
I. 3 consent - Coercion - Undue influence - Misrepresentation - Fraud - 5
Mistake
Void agreements -Discharge of contract - Breach of
4
contract and remedies
4
5 Contingent contracts -Quasi contracts 2
II. An overview of Special Contracts 15
6 Contract of Indemnity: Meaning – Nature-Right of indemnity 2
holder and indemnifier
7 Contract of Guarantee: Meaning- Nature-Rights and liabilities of 3
surety -Discharge of surety from liability
8 Contract of Bailment and Pledge-Rights and duties of bailor and 5
bailee, Pledger and Pledgee
9 Contract of Agency - Creation of agency - Delegation of authority - 5
Duties and liabilities of principal and agent -Termination of agency.
Sale Of Goods Act 10
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10 Contract for sale of goods 2

11 Essentials of a contract of sale 2
III. 12 Conditions and Warranties 2
13 Caveat emptor- Sale by non-owners 2
14 Rules as to delivery of goods - Un paid seller-Rights 2
Cyber Law 8
15 Introduction to Indian Cyber Law 1
16 E Commerce - Digital signature – Electronic Contracts 1
IV. 17 Cyber Space- Cyber crime and its types. 2
18 Penalties and Offences 2
19 Investigation and adjudication under IT act 2000-IPR 2
Open ended module 12
Suggested topics:
• Various Cases relating to course can be discussed
V. • An overview of Consumer Regulations
• An overview of Environmental Regulations

Note: The subject teacher has to prepare the detailed syllabus of the module

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