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  • Misrepresented The Fact About Insolvency. Super FMCG Can Consider Foregoing A Certain

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    Saprem Kulkarni
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    Under Indian contract law and sale of goods acts, no sale can occur with an insolvent company so the retailer's purchase does not constitute a sale, relieving Super FMCG of paying commission to its agent Kumar. As an agent, Kumar violated his duties by allowing credit sales against Super FMCG's cash-and-carry policy, making him liable to pay back the sales amount minus commission. While Kumar claims the retailer misled him, Super FMCG may reduce the recovery amount for humanitarian reasons but Kumar must still pay fees for using legal processes to recover funds.

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    Under Indian contract law and sale of goods acts, no sale can occur with an insolvent company so the retailer's purchase does not constitute a sale, relieving Super FMCG of paying commission to its agent Kumar. As an agent, Kumar violated his duties by allowing credit sales against Super FMCG's cash-and-carry policy, making him liable to pay back the sales amount minus commission. While Kumar claims the retailer misled him, Super FMCG may reduce the recovery amount for humanitarian reasons but Kumar must still pay fees for using legal processes to recover funds.

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    22 views1 page

    Misrepresented The Fact About Insolvency. Super FMCG Can Consider Foregoing A Certain

    Uploaded by

    Saprem Kulkarni
    Under Indian contract law and sale of goods acts, no sale can occur with an insolvent company so the retailer's purchase does not constitute a sale, relieving Super FMCG of paying commission to its agent Kumar. As an agent, Kumar violated his duties by allowing credit sales against Super FMCG's cash-and-carry policy, making him liable to pay back the sales amount minus commission. While Kumar claims the retailer misled him, Super FMCG may reduce the recovery amount for humanitarian reasons but Kumar must still pay fees for using legal processes to recover funds.

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    © All Rights Reserved
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    Applicable laws - Section 211, Indian Contract Act (1872) and Sale of Goods Act, 1930 

    Under normal sales, the company will receive sales amount and pay a specific commission
    to the agent. As per Sale of Goods Act, a contract needs to exist for sale to happen. A
    contract cannot be legally formed with an insolvent company. In this case, since the retailer
    is insolvent, a contract doesn’t exist and no sale can be said to have taken place. Thus,
    Super FMCG isn’t liable to pay the commission to Kumar.

    Super FMCG clearly works on a cash and carry basis. Kumar being an agent of Super
    FMCG defies the duties of the agent as per Section 211, Indian Contract Act. He is liable
    to pay the recovery amount to Super FMCG. This recovery amount will be the sales amount
    minus the commission amount that was supposed to be given to the agent. 

    Kumar has conveyed that the sales happened on a good faith basis. The retailer
    misrepresented the fact about insolvency. Super FMCG can consider foregoing a certain
    amount purely on humanitarian grounds. Kumar is liable to pay the recovery fees and the
    legal process charges thereby involved.

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