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1CONTRACT : DEFINITION AND CONCEPT

PAGE

1.1 Introduction 11.2 What is contract 2

1.2-1 Agreement 2

1.2-2 Legal enforceability of an agreement 3

1.2-3 All agreements are not contracts 5

1.3 Essential Elements of a valid contract 51.4 Writing and registration of contract 8

1.5 Classification of contracts 9

1.5-1 English law 91.5-2 Indian law 9

1.6 Some important comparisons 151.6-1 Agreement and Contract 151.6-2 Illegal and Void Agreements 151.6-3 Void and Voidable Contract 151.6-4 Void Agreement and Void Contract 16

2AGREEMENT : OFFER AND ACCEPTANCE

2.1 Introduction 192.2 Offer/Proposal 20

2.3 Offer should be distinguished from 262.3-1 Cross offers 262.3-2 Counter offers 272.3-3 Invitation to offer 272.3-4 Standing offer 29

I-7

4 Termination of offer 30

2.4-1 Instances of termination of offer as per section 6of the Act 30

2.4-2 Other instances when an offer gets terminated 32

2.5 Acceptance of an offer 32

2.6 Communication of offer, acceptance and revocation 37

2.6-1 Communication of offer - When complete 37

2.6-2 Communication of acceptance - When complete 38

2.6-3 Effect of delay or loss of letter of acceptance inpostal transit 38

2.6-4 Communication of revocation - When complete 39

3CONSIDERATION AND LEGALITY

3.1 Introduction 43

3.2 What is consideration 443.2-1 Essential elements of consideration 45

3.2-2 Rules regarding consideration 48

3.3 Exceptions to the doctrine of consideration 503.4 Stranger to contract vis-a-vis stranger to consideration 52

3.4-1 Stranger to the contract 52

3.4-2 Stranger to consideration 53

3.4-3 Exceptions to the Doctrine of privity to contract 53

3.5 Legality of object and consideration 56

3.6 Agreements opposed to public policy 57

3.7 Effect of unlawful object and consideration 613.7-1 Object and consideration wholly unlawful 61

3.7-2 Objects and consideration unlawful in part 62

4CAPACITY OF PARTIES

4.1 Introduction 66

4.2 Minors 67

4.2-1 Who is a minor 674.2-2 Status of the contracts entered into by a minor 67

4.2-3 The status of a minor with respect to the agree-ments entered into by him 68

CONTENTS I-8

2-4 Minor and Special Contracts/Agreements 72

4.3 Persons of unsound mind 744.3-1 Who is a person of unsound mind 74

4.3-2 Unsoundness of mind may take various forms 74

4.3-3 Effect of the agreement entered into by the personsof unsound mind 75

4.3-4 Burden of proof 75

4.4 Disqualified persons 75

5FREE CONSENT

5.1 Introduction 79

5.2 Coercion 80

5.2-1 Acts amounting to coercion 80

5.2-2 Features of coercion 81

5.2-3 Special Points to be noted 81

5.2-3a Threat to commit suicide 82

5.2-3b Threat to prosecution 82

5.2-4 Effect of coercion 82


5.3 Undue influence 83

5.3-1 What is undue influence 83

5.3-2 Features of undue influence 84

5.3-3 Special point : Transaction with Pardanashinwoman 85

5.3-4 Effect of undue influence 85


5.4 Fraud 86

5.4-1 Definition of fraud 86

5.4-2 Acts which constitute fraud 87

5.4-3 Mere silence is not Fraud 88

5.4-4 Effect of fraud 90


5.5 Misrepresentation 91

5.5-1 What is misrepresentation 91

5.5-2 When a consent is said to be caused by mis-representation 92

I-9 CONTENTS

5-3 Effect of misrepresentation 92


5.6 Limitations to the right of rescission 93

5.7 Mistake 93

5.7-1 Mistake of law 94

5.7-1a Mistake of Indian Law 94

5.7-1b Mistake of Foreign Law 94

5.7-2 Mistake of fact 94

5.7-2a Bilateral mistake 94

5.7-2b Unilateral Mistake 97

5.7-3 Effect of mistake 98

5.8 Some important comparisons 99

5.8-1 Fraud and misrepresentation 99

5.8-2 Coercion and undue influence 99

6VOID AGREEMENTS

6.1 Introduction 102

6.2 Agreements in restraint of marriage 103

6.3 Agreements in restraint of trade 103

6.3-1 What is an agreement in restraint of trade 103

6.3-2 Exceptions to the rule that agreements in restraintof trade are void 104

6.3-2a Exception under the Indian ContractAct, 1872 - Sale of goodwill 104

6.3-2b Exceptions under the PartnershipAct, 1932 105

6.3-2c Exceptions established by judicialdecisions 106

6.4 Uncertain agreements 107

6.5 Agreements in restraint of legal proceedings 107

6.5-1 Restrictions must be absolute 107

6.5-2 Curtailing the period of limitation 108

6.5-3 Exceptions in the agreements against legalproceedings 108

6.6 Wagering agreements 109

6.6-1 What is a wager 109

CONTENTS I-10

6-2 Essentials of a wager 109

6.6-3 Effect of wagering agreements 110

6.6-3a Main transaction 110

6.6-3b Collateral transaction 110

6.6-4 Exception in the wagering agreements 111

6.6-5 Special transactions resembling to wagering 111

6.7 Agreements contingent on impossible events 112

6.8 Agreements to do impossible acts 113

7CONTINGENT CONTRACTS


7.2 What is a contingent contract 117

7.3 Rules regarding a contingent contract 118

7.4 Effect of contingent contracts 120

7.5 An important comparison 120

7.5-1 Wagering agreement and contingent contract 120

8QUASI CONTRACTS


8.2 Various forms a quasi contract may take 123

8.2-1 Supply of necessaries 123

8.2-2 Payment of lawful dues by interested person 123

8.2-3 Obligation of a person enjoying benefit of agratuitous act 125

8.2-4 Responsibility of finder of goods 126

8.2-5 Liability of a recipient of goods delivered bymistake or under coercion 127

8.3 Failure to discharge obligations created by quasi contracts 128

9PERFORMANCE OF CONTRACTS


9.2 Actual or attempted performance 131

I-11 CONTENTS

2-1 Actual performance 131

9.2-2 Attempted performance 131

9.2-2a Essentials of a valid tender of perfor-mance 131

9.2-2b Effect of refusal to ‘Tender of perfor-mance’ 133

9.3 When law excuses non-performance of contract 133

9.4 Who should perform the contract 133

9.5 Who can demand performance 135

9.6 Time and place for performance 135

9.6-1 Rules as to time and place for performance 135

9.6-2 Effect of failure to perform in time 137

9.7 Joint promises 138

9.7-1 What is a joint promise 138

9.7-2 Who can demand performance of joint promi-ses 139

9.7-3 Who should perform a joint promise 139

9.7-4 Rights and liabilities amongst joint promisors 140

9.8 Reciprocal promises 141

9.8-1 What is reciprocal promise 141

9.8-2 Rules regarding performance of reciprocalpromises 141

9.9 Appropriation of payments 143

9.10 Assignment of a contract 145


9.11-1 Succession and Assignment 146

10DISCHARGE OF CONTRACT


10.2 Discharge by performance 151

10.3 Discharge by impossibility of performance 151

10.3-1 Where impossibility is existent at the time ofmaking contract 151

10.3-2 Where impossibility arises subsequently afterthe formation of contract 151

10.3-3 Factors causing impossibility to performance 152

CONTENTS I-12

3.4 Effect of doctrine of supervening impossibility 153

10.3.5 Non-applicability of the Doctrine of Superven-ing Impossibility 154

10.4 Discharge by mutual agreement 155

10.4-1 Novation 155

10.4-2 Alteration 156

10.4-3 Rescission 156

10.4-4 Remission 156

10.4-5 Waiver 157

10.5 Discharge by lapse of time 157

10.6 Discharge by operation of law 157

10.7 Discharge by breach of contract 158

10.7-1 Actual breach 158

10.7-2 Anticipatory Breach 159

11REMEDIES FOR BREACH OF CONTRACT


11.2 Rescission of a Contract 164

11.2-1 What is Rescission 164

11.2-2 Consequences of rescission 164

11.2-3 Different options to avail relief in case of rescission 164

11.3 Suit for damages 165

11.3-1 Kinds of damages and rules to assess their quantum 165

11.3-2 Measuring interest damages 170

11.3-3 Other relevant provisions 171

11.4 Suit for specific performance 172

11.5 Suit for an injunction 173

11.6 Suit upon ‘quantum meruit’ and ‘restitution’ 173

11.6-1 ‘Quantum Meruit’ 173

11.6-2 Restitution 174

11.6-3 Generalisations based upon the doctrine of‘Quantum Meruit’ and ‘Restitution’ 174

I-13 CONTENTS

INDEMNITY AND GUARANTEE


12.2 Contract of indemnity 179

12.3 Contract of Guarantee 181

12.4 Kinds of Guarantee 182

12.4-1 Retrospective and prospective guarantee 182

12.4-2 Specific and continuing guarantee 182

12.5 Nature and Extent of Surety’s liability 184

12.6 Rights of surety 185

12.6-1 Rights against the principal debtor 185

12.6-2 Rights against the creditor 186

12.6-3 Rights against co-sureties 187

12.7 Discharge of surety 188

12.8 An Important comparison 192

12.8-1 Contract of Indemnity and Contract of Guarantee 192

13BAILMENT AND PLEDGE


13.2 Basic elements of bailment 196

13.3 Types of Bailment 19713.3-1 Classification on the basis of profit that each

party to the transaction receives 197

13.3-2 Classification on the basis of expectation ofreward by the parties 198

13.4 Duties of a bailor 19813.5 Rights of a bailor 199

13.6 Duties of Bailee 200

13.7 Rights of bailee 203

13.8 Bailee’s right of lien 204

13.8-1 Particular lien 205

13.8-2 General lien 206

13.8-3 How right of general lien is exercised byspecified bailees 206

13.9 Termination of bailment 207

CONTENTS I-14

10 Finder of lost goods 208

13.10-1 Duties of a finder of goods 208

13.10-2 Rights of a finder of goods 208

13.11 Pledge or pawn 209

13.11-1 What is a pledge 209

13.11-2 Essential features of a pledge 209

13.11-3 Who can make a pledge 210

13.11-4 Duties of a Pawnor 212

13.11-5 Rights of a Pawnor 212

13.11-6 Duties of a Pawnee 213

13.11-7 Rights of a Pawnee 213


13.12-1 Bailment and pledge 214

13.12-2 Particular lien and general lien of a bailee 215

13.12-3 Pledge and lien 215

14AGENCY


14.2 Contract of agency 219

14.3 Test of agency 220

14.4 Classification of agents 220

14.4-1 Classification based on the extent of agents’authority 220

14.4-2 Classification based on the nature of workperformed by agents 221

14.5 Creation of agency 222

14.5-1 Agency by express agreement 222

14.5-2 Agency by implied agreement 222

14.5-3 Agency by operation of law 225

14.5-4 Agency by ratification 225

14.6 Extent of agent’s authority 227

14.6-1 Actual or real authority 227

14.6-2 Ostensible or apparent authority 228

14.6-3 Authority in emergency 228

14.7 Delegation of authority by an agent 229

I-15 CONTENTS

7-1 An agent cannot delegate his authority 229

14.8 Sub-agent 229

14.8-1 Who is a sub-agent 229

14.8-2 Consequences of appointing a sub-agent 230

14.9 Substituted agent 230

14.10 Pretended agent 231

14.11 Duties of an agent 231

14.12 Rights of an agent 234

14.13 Rights of a principal 237

14.14 Duties of a principal 237

14.15 Position of principal towards third parties 237

14.15-1 Position of named principal 237

14.15-2 Position of unnamed principal 239

14.15-3 Position of undisclosed principal 239

14.16 Position of an agent towards third parties 240

14.16-1 Circumstances where an agent becomes per-sonally liable to third parties 240

14.17 Termination of agency 241

14.17-1 Termination by act of the parties 241

14.17-2 Termination by operation of law 243

14.17-3 When termination of agency takes effect 244

14.18 Irrevocable agency 244

14.18-1 Agency coupled with interest [Section 202] 244

14.18-2 Agent incurs personal liability 245

14.18-3 Agent partly exercise the authority [Section 204] 246


14.19-1 Agent and servant 246

14.19-2 Agent and independent contractor 246

14-19-3 Agent and bailee 247

15CONTRACT OF SALE OF GOODS


15.2 Contract of sale 251

15.3 Sale and agreement to sell 253

15.3-1 Sale 253

CONTENTS I-16

3-2 Agreement to sell 253

15.3-3 Comparison between sale and ‘agreement to sell’ 254

15.4 Kind of Goods 255

15.4-1 Existing goods [Section 6(1)] 255

15.4-2 Future goods [Section 2(6)] 255

15.4-3 Contingent goods [Section 6(2)] 256

15.5 Perishing of goods 256

15.5-1 When goods are considered to be perished 256

15.5-2 Effect of perishing of the subject-matter of acontract 256

15.6 Determination of price of goods 259

15.6-1 How to fix the price 259

15.6-2 Situation when price fixation is to be done by thirdparty [Section 10] 260

15.6-3 ‘Earnest money’ and ‘Security deposit’ 260

15.7 Consequences of not adhering to the time in a salescontract 261

15.7-1 When time is stipulated regarding the payment ofprice 261

15.7-2 When time is stipulated regarding delivery ofgoods 261

15.8 Documents of title to goods [Section 2(4)] 261


15.9-1 Sale and hire purchase 262

15.9-2 Agreement to sell and hire purchase 263

15.9-3 Sale and bailment 264

15.9-4 Sale of goods and contract for work and labour 264

15.9-5 Barter, Exchange and Sale 265

16CONDITIONS AND WARRANTIES


16.2 Condition and warranty defined 269

16.2-1 Condition 269

16.2-2 Warranty 269

16.3 Implied conditions and implied warranties 270

16.3-1 Implied Conditions 270

I-17 CONTENTS

3-2 Implied Warranties 275

16.4 Change of a condition into warranty 27616.5 Exclusion of implied conditions and warranties 277

16.6 Doctrine of caveat emptor 278

16.6-1 Meaning 27816.6-2 Exceptions to the doctrine of caveat emptor 278


16.7-1 Condition and warranty 279

16.7-2 Condition as to Fitness of goods for buyer’spurpose and condition as to Merchantability 280

17TRANSFER OF PROPERTY


17.2 Significance of transfer of ownership 284

17.3 Rules regarding transfer of property 28517.3-1 Transfer of ownership in the sale of specific goods 285

17.3-2 Transfer of ownership in the sale of unascer-tained or future goods 288

17.4 Transfer of title 29017.4-1 No one can transfer better title then he him-

self possess 290

17.4-2 Exceptions to the rule 290

18PERFORMANCE OF CONTRACT OF SALE


18.2 Delivery of goods by seller 296

18.2-1 What is the meaning of ‘delivery’ 296

18.2-2 Modes of delivery 296

18.2-3 Rules regarding effective delivery of goods 297

18.3 Acceptance of delivery by the buyer 301

18.3-1 What is meant by acceptance of delivery of goods 301

18.3-2 Rules regarding acceptance of delivery of goods 301

18.4 Duties of the buyer 302

CONTENTS I-18

REMEDIES


19.2 Buyer’s breach 307

19.3 Unpaid seller’s remedies 30719.3-1 Who is an ‘unpaid seller’ 307

19.3-2 Rights of an ‘unpaid seller’ 308

19.3-2a Right of an ‘unpaid seller’ against thegoods 308

19.3-2b Rights of ‘unpaid seller’ against thebuyer 312

19.4 Seller’s breach : Buyer’s remedies 313

19.4-1 Ways in which a seller may breach 313

19.4-2 Remedies available to a buyer 314

19.5 Anticipatory breach of contract 31519.6 Auction sale 315

19.6-1 Meaning 315

19.6-2 Rules 31519.6-3 Some important terms used in an auction sale 316


19.7-1 Seller’s right of lien and seller’s right of stoppagein transit 317

20PARTNERSHIP : AN INTRODUCTION


20.2 What is a partnership 321

20.2-1 Definition 321

20.2-2 Essential elements of a partnership 321

20.3 Test of partnership 324

20.3-1 How to test existence of partnership 324

20.3-2 Sharing profits is not a conclusive evidenceof a partnership 325

20.3-3 The mutual agency test is an important test ofpartnership 326

20.4 Partners, firm and firm name 326


I-19 CONTENTS

5-1 Partnership and Joint Stock Company 327

20.5-2 Partnership and Hindu Undivided Family (HUF) 328

20.5-3 Partnership and co-ownership 329

20.5-4 Partnership and a Club 330

21FORMATION OF PARTNERSHIP


21.2 Partnership Deed 334

21.3 Registration of firms 334

21.3-1 Registration of a firm is discretionary 334

21.3-2 Procedure for registration of a firm 33521.3-3 Recording of alterations 335

21.3-4 Penalty for furnishing false particulars [Section 70] 336

21.3-5 Register of firms 336

21.4 Effects of Non-Registration 336

21.4-1 Disabilities of a firm due to non-registration 336

21.4-2 Exceptions as to disabilities of non-registration 337

21.5 Kinds of Partnership 338

21.6 Kinds of Partners 339

22RIGHTS AND OBLIGATIONS OF PARTNERS


22.2 Mutual rights of partners 344

22.3 Mutual duties and limitations of partners 345

22.3-1 Absolute duties 345

22.3-2 General duties 346

22.4 Minor as a partner 348

22.4-1 General Status 348

22.4-2 Rights of a minor partner 348

22.4-3 Limitations and liabilities of minor partner 349

22.4-4 Position of a minor on attaining majority 349

22.5 Relations of partners with third parties 349

22.5-1 A partner binds himself and his firm providedhe acts within his authority 349

CONTENTS I-20

5-2 Authority of a partner 350

22.6 Liabilities of a firm and its partners to third parties 353

22.6-1 Liability of a partner for acts of the firm 353

22.6-2 Liability of a firm for acts of the partners 353

22.6-3 Liability of a firm for misapplication by partners 353

22.7 Reconstitution of a firm 354

22.7-1 Admission of a partner 354

22.7-2 Retirement of a partner 355

22.7-3 Expulsion of a partner 357

22.7-4 Insolvency of a partner 357

22.7-5 Death of a partner 357

22.7-6 Transfer of partner’s interest 357

22.8 Effect of change in firm on mutual rights and duties ofpartners 358

22.9 Effect of change in firm on continuing guarantee 358

22.10 Partnership property 358

23DISSOLUTION OF A PARTNERSHIP FIRM


23.2 Modes of dissolution of a firm 364

23.2-1 By agreement [Section 40] 36423.2-2 By notice [Section 43] 364

23.2-3 On the happening of certain contingencies[Section 42] 364

23.2-4 Compulsory dissolution [Section 41] 365

23.2-5 By court [Section 44] 365

23.3 Consequences of Dissolution 36723.3-1 Continuing liability of partners after dissolu-

tion of a firm 367

23.3-2 Rights of partners after dissolution of the firm 368

23.4 Settlement of accounts upon dissolution 369

23.5 Sale of goodwill after dissolution 371

23.6 Public notice 371

I-21 CONTENTS

NEGOTIABLE INSTRUMENTS


24.2 What is a negotiable instrument 376

24.3 Characteristics of a Negotiable Instrument 377

24.4 Kinds of negotiable instruments 378

24.5 Hundis 37924.6 Classification of Negotiable Instruments 380

24.7 Presumptions as to the negotiable instruments 384

24.8 Law overriding the provisions of the Negotiable InstrumentsAct, 1881 385

25PROMISSORY NOTES, BILLS OF EXCHANGE AND CHEQUES


25.2 Promissory Note 38925.2-1 Definition 389

25.2-2 Parties to a Promissory Note 389

25.2-3 Essentials of a valid Promissory Note 38925.2-4 Specimen of a Promissory Note 395

25.3 Bill of exchange 395


25.3-2 Parties to a bill of exchange 395

25.3-3 Essentials of a valid bill of exchange 396

25.3-4 Specimen of a bill of exchange 397

25.3-5 Different kinds of Bill of Exchange 397

25.4 Cheque 402


25.4-2 Parties to a cheque 402

25.4-3 Essentials of a valid cheque 403

25.4-4 Specimen of a cheque 40325.5 Some important comparisons 403

25.5-1 Promissory Note and Bill of Exchange 403

25.5-2 Bill of Exchange and Cheque 404

CONTENTS I-22

PARTIES TO A NEGOTIABLE INSTRUMENT


26.2 Holder 411

26.2-1 Definition 41126.2-2 Status of a holder 411

26.2-3 Who is not a holder 412

26.3 Holder in due course 41226.3-1 Definition 412

26.3-2 Essentials to become a holder in due course 413

26.4 Privileges of being of a holder in due course 41426.5 Capacity of parties 418

26.5-1 Minor’s position as a drawer, indorser, etc. 419

26.5-2 Persons of unsound mind 419

26.5-3 Insolvent 419

26.5-4 Corporations and companies 420

26.5-5 Agents 420

26.5-6 Legal Representative 421

26.6 Liability of parties 421

26.6-1 Liability of drawer of the instrument [Section 30] 422

26.6-2 Liability of a banker as a drawee [Sections 31 & 77] 422

26.6-3 Liability of maker of note and acceptor of bill[Section 32] 422

26.6-4 Liability of indorser [Section 35] 423

26.6-5 Liability of prior parties [Section 36] 423

26.6-6 Liability inter se [Sections 37 to 40] 423

26.7 Important Comparison 425

26.7-1 Holder and holder in due course 425

27HOW TO NEGOTIATE AN INSTRUMENT


27.2 What is negotiation 431

27.3 Assignment 431

27.4 Who may negotiate an instrument 432

27.5 When a negotiable instrument stops to be negotiable 432

I-23 CONTENTS

6 Methods of negotiation 433

27.6-1 Negotiation of bearer instruments 434

27.6-2 Negotiation of order instruments 434

27.7 Delivery of a negotiable instrument 434

27.7-1 What constitutes delivery of an instrument 434

27.7-2 Kinds of delivery 434

27.7-3 Who can make delivery to whom 435

27.8 Indorsement 435

27.8-1 What constitutes an indorsement 435

27.8-2 Essentials of a valid indorsement 436

27.8-3 Effect of indorsement 436

27.8-4 Types of indorsements 436

27.9 Negotiation back 440

27.10 Negotiation by unauthorized parties 440

27.11 Negotiation of dishonoured and overdue instruments 442

27.12 Important comparison 443

27.12-1 Negotiation and assignment 443

28DISCHARGE, PRESENTMENT AND DISHONOUR

OF A NEGOTIABLE INSTRUMENT


28.2 Discharge 448

28.2-1 How to get a discharge on a negotiable instrument 448

28.2-2 What is payment in due course 452

28.3 Presentment 453

28.3-1 Presentment for acceptance 454

28.3-2 Presentment for sight 456

28.3-3 Presentment for payment 457

28.4 Dishonour 460

28.4-1 Dishonour by non-acceptance [Section 91] 460

28.4-2 Dishonour by non-payment [Section 92] 460

28.4-3 Effect of dishonour of a negotiable instrument 460

28.4-4 Notice of dishonour 461

28.5 Noting 463

CONTENTS I-24

6 Protest 464

28.7 Rules as to compensation in case of dishonour 466

29BANKER AND CUSTOMER


29.2 Banker and customer 47229.2-1 Who is a banker 472

29.2-2 Who is a customer 473

29.2-3 Legal relationship between a banker and acustomer 473

29.3 Crossing of a cheque 473

29.3-1 General crossing 473

29.3-2 Special crossing 474

29.3-3 Not negotiable crossing 475

29.3-4 Restrictive crossing 476

29.3-5 Who can cross the cheque 477

29.3-6 Opening or cancellation of a crossing 477

29.4 Rights and obligations of a banker 477

29.4-1 When banker must refuse payment on hiscustomer’s cheques 478

29.4-2 When banker may refuse payment on hiscustomer’s cheques 479

29.4-3 Special provisions relating to electronic cheques 480

29.5 Protection granted to bankers 481

29.5-1 Protection given to a paying banker 481

29.5-2 Protection given to a collecting banker 482

29.6 Wrongful dishonour of cheques by a banker 483

29.6-1 Liability towards the drawer of the cheque 483

29.6-2 Liability towards the payee (or holder) of thecheque 484

29.7 Obligations of a customer 48429.8 Bouncing of cheques 485

29.8-1 When an offence under section 138 is constituted 485

29.8-2 Procedure to seek redressal 48729.8-3 Parties punishable for offence under section 138 489

29.8-4 Presumption in favour of holder 489

29.8-5 Defence which is specifically barred 490

I-25 CONTENTS

SOME IMPORTANT PROVISIONS


30.2 Maturity of negotiable instruments 493

30.2-1 When negotiable instruments payable on demandmature 494

30.2-2 When negotiable instruments payable on or afterspecified date mature 494

30.2-3 Computation of date of maturity 494

30.3 What is meant by acceptance of a bill of exchange 495

30.3-1 Essentials of a valid acceptance 495

30.3-2 Types of acceptance 496

30.4 Acceptance for honour 497

30.4-1 Certain conditions must be satisfied for acceptingthe bill for honour 497

30.4-2 Rights and liabilities of acceptor for honour 497

30.5 Payment for honour 497

30.6 Consideration in a negotiable instrument 498

30.6-1 Effect of absence or failure of consideration in anegotiable instrument 498

30.6-2 Partial absence or failure of consideration 499

30.7 Payment of interest 500

30.8 Applicability of international law 500

30.9 Important comparison 502

30.9-1 Acceptance for honour and payment for honour 502

31CONSUMER PROTECTION ACT : A MUCH

NEEDED LEGISLATION


31.2 Who is a consumer 506

31.2-1 Consumer of goods 507

31.2-2 Consumer of services 508

31.3 Complaint 510

31.3-1 What Constitutes a complaint [Section 2(1)(c)] 510

31.3-2 Who can file a complaint [Sections 2(b) & 12] 510

CONTENTS I-26

3-3 What a complaint must contain [Section 2(1)(c)] 511

31.3-4 Time frame within which a complaint can befiled 513

31.3-5 Relief available against complaint [Section 14] 513

31.3-6 When a complaint cannot be filed 514

31.3-7 Dismissal of frivolous and vexatious complaints[Section 26] 515

31.4 Unfair Trade Practice and Restrictive Trade Practice[Section 2(1)(r) & (nnn)] 515

31.4-1 What is an Unfair Trade Practice 515

31.4-2 What is a Restrictive Trade Practice 517

31.5 Goods and Defect [Section 2(1)(i) & (f)] 51831.5-1 Goods 518

31.5-2 Defect 518

31.6 Service and Deficiency [Section 2(1)(o) & (g)] 519

31.6-1 What can be termed as a service 519

31.6-2 What is meant by “deficiency” in service 521

31.7 Trader and Manufacturer [Section 2(1)(q) &(j)] 522

31.7-1 Trader 522

31.7-2 Manufacturer 522

31.7-3 Who should be sued by a consumer - Manufactureror seller 523

32CONSUMER PROTECTION COUNCILS


32.2 Objects of the Councils [Sections 6, 8, & 8B] 527

32.3 Central Council 528

32.4 State Consumer Protection Councils (State Councils)[Section 7] 529

32.5 District Consumer Protection Councils (District Councils)[Section 8A] 530

32.6 Working Groups [Rule 3] 530

33CONSUMER FORUMS


I-27 CONTENTS

2 Constitution of the Forums 533

33.2-1 Constitution of District Forum [Section 10] 534

33.2-2 Constitution of State Commission [Section 16] 535

33.2-3 Constitution of National Commission [Section 20] 537

33.3 Jurisdiction 540

33.3-1 Jurisdiction of District Forum [Section 11] 540

33.3-2 Jurisdiction of State Commission [Section 17] 541

33.3-3 Jurisdiction of National Commission 542

33.4 Procedures Relating to Consumer complaints[Sections 12 & 13] 543

33.4-1 How a complaint is dealt by ConsumerForums 544

33.4-2 Procedure to be followed by the National Commis-sion [Sections 22 & 22A] 546

33.5 Service of Notice [Section 28A] 546

33.6 Powers of the Consumer Forums [Sections 13(4), 14(1)& Rule 10] 547

33.7 Sitting of the Forums 549

33.7-1 Sitting of the District Forum [Section 14(2)] 549

33.7-2 Sitting of the State Commission 549

33.7-3 Sitting of the National Commission 550

33.8 Orders of the Forums 550

33.8-1 Signing of orders of the Forums 550

33.8-2 Appeals against orders 551

33.8-3 Finality of orders 552

33.8-4 Penalties for non-compliance of orders 552

34ARBITRATION AND CONCILIATION ACT, 1996

34.1 Background of the Act 554

34.1-1 Scheme of the Act 555

34.2 Domestic Arbitration 556

34.2-1 Arbitration Agreement 557

34.3 Court must refer the matter to arbitration in some cases 557

34.3-1 Matter not to be split if partly covered underagreement 558

CONTENTS I-28

3-2 Consumer Forum can entertain complaintirrespective of arbitration 559

34.3-3 Application for winding up cannot be referred 559

34.3-4 Matter can be referred even if appeal is pending 559

34.3-5 Unregistered partnership firm can apply forarbitration 559

34.3-6 Challenge to jurisdiction or validity of arbitrationagreement 560

34.4 Arbitration clause in agreement 560

34.5 Formation of Arbitral Tribunal 561

34.5-1 Appointment of Arbitrator 561

34.5-2 Challenge to appointment of Arbitrator 562

34.5-3 Termination or substitution of Arbitrator 563

34.6 Conduct of Arbitral Proceedings 563

34.6-1 Cost of Arbitration 564

34.6-2 Settlement during arbitration 565

34.7 Arbitral Award 565

34.7-1 Law applicable to Arbitration 565

34.7-2 Requirement of Award 565

34.7-3 Stamp Duty on Arbitration Award 566

34.7-4 Finality and enforcement of arbitration award 566

34.7-5 Termination of arbitration proceedings 566

34.8 Intervention by Court in Arbitration proceedings 567

34.9 Setting aside arbitral award by Court 568

34.9-1 Setting aside if contrary to law 570

34.9-2 Appeal against order of District Court 570

34.10 Conciliation 570

34.11 Enforcement of Foreign Awards 572

I-29 CONTENTS