1. What is Contract of Indemnity?

Contract of indemnity meaning is a special kind of contract. The term ‘indemnity’ literally
means “security or protection against a loss” or compensation. According to Section 124 of
the Indian Contract Act, 1872 “A contract by which one party promises to save the other from
loss caused to him by the conduct of the promisor himself, or by the conduct of any other person,
is called a contract of indemnity.”
Example: P contracts to indemnify Q against the consequences of any proceedings which R may
take against Q in respect of a certain sum of money

2. Unascertained goods:
The goods which are not separately identified or ascertained at the time of making of the contract
are known as ‘unascertained goods’. They are indicated or defined only by description. For
example, if A agrees to sell to B one bag of sugar out of the lot of one hundred bags lying in his
godown, it is a sale of unascertained goods because it is not known which bag is to be delivered.
As soon as a particular bag is separated from the lot for delivery, it becomes ascertained or
specific goods.

3. The Doctrine of Caveat Emptor

The doctrine of Caveat Emptor is an integral part of the Sale of Goods Act. It translates to “let the
buyer beware”. This means it lays the responsibility of their choice on the buyer themselves.
It is specifically defined in Section 16 of the act “there is no implied warranty or condition as to
the quality or the fitness for any particular purpose of goods supplied under such a contract of
sale“
A seller makes his goods available in the open market. The buyer previews all his options and
then accordingly makes his choice. Now let’s assume that the product turns out to be defective or
of inferior quality.
This doctrine says that the seller will not be responsible for this. The buyer himself is responsible
for the choice he made.
So the doctrine attempts to make the buyer more conscious of his choices. It is the duty of the
buyer to check the quality and the usefulness of the product he is purchasing. If the product turns
out to be defective or does not live up to its potential the seller will not be responsible for this.

4. Agreement to Sell: The section 4(3) of the sale of Goods Act defines it as

An agreement to sell can be defined as the transfer of property in goods that is to take place in
future time or the transfer might take place depending on the fulfilment of certain conditions. 
The same had been defined in section 4(3). An agreement to sell also becomes a sale when the
given time elapses or the conditions that are needed for the transfer to happen gets fulfilled.
Thus, an agreement to sell establishes the terms and conditions of the offer of a property by the
seller to the buyer.
5. Holding Out
The doctrine of holding out has been provided under section 28 of the Indian Partnership Act,
1932. Section 28 reads as:
“Holding Out - (1) Anyone who by words spoken or written or by conduct represent himself, or
knowingly permits himself to be represented, to be a partner in a firm, is liable as a partner in
that firm to anyone who has on the faith of any such representation given credit to the firm,
whether the person representing himself or represented to be a partner does or does not know
that the representation has reached the person so giving credit.
(2) Where after partner's death the business continued in the old firm-name, the continued use of
that name or of the deceased partner's name as a part thereof shall not of itself make his legal
representative or his estate liable for any act of the firm done after his death.”
6. Particular partnerships: Section 8 of Indian Partnership Act says :-
"A person may become a partner with another person in particular adventures or undertakings."
Relation of partnership may be permanent and no time limitation is fixed for dissolution, then it
is called `partnership at will' as defined under section 7 whereas when partnership is for
particular adventure, work or undertaking, it is called `particular partnership' upon the
completion of work; undertaking, partnership also dissolve unless partners resolve to extend. So
"Partnership" as defined under section 4 of Act may be either "partnership at will" or "Particular
partnership".

In Gheru Lal Parakh v. Maha Deo Das, AIR 1959 SC 781, it was held that a partnership
between two persons for entering into certain wagering transaction for particular season is a valid
particular partnership.
7. Unpaid Seller
According to Section 45(1) of Sale of Goods Act, 1930, the seller is considered as an unpaid
seller when:
a- When the whole price has not been paid and the seller has an immediate right of action for the
price.

b- When Bills of Exchange or other negotiable instrument has been received as conditional

payment, and the pre-requisite condition has not been fulfilled by reason of the dishonour of the
instrument or otherwise. For instance, X sold some goods to Y for $50 and received a cheque.
On presentment, the cheque was dishonoured by the bank. X is an unpaid seller.

Seller also includes a person who is in a position of a seller i.e agent, consignor who had himself
paid or is responsible for the price.

8. Express Authority of Partner-An authority given to a Partner by words or written, with the
consent of all Partners is called an Express Authority. This type of authority is not defined in the
Partnership Act, but it is decided by the Partners themselves. The firm is bound to third parties
by all acts of a Partner done within the scope of his express authority.
9. Continuing Guarantee: 
It is a guarantee for a series of transactions. According to Section 129, continuing guarantee
extends to a series of transactions. The liability of surety in this case extends to a number
of transactions and he becomes liable for the unpaid balance at the end of the
guarantee
Example: A, in consideration that B will employ C in collecting the rents of B’s zamindari,
promises B to be responsible to the amount of Rs. 50,000, for the due collection and payment
by C of those rents. It is a continuing guarantee.

10. Particular Lien:

            Section 170 of the Indian Contract Act, 1872 which confers on the Bailee, the right of
particular lien. A particular lien gives the right to retain possession only of goods in respect of
which the changes or dues have arisen. The right of particular lien can be successfully claimed if,
by the exercise of labour or skill, there has been some improvement of the goods. The Right of
Particular Lien can be claimed only in respect of goods upon which labour or skill has been
exercised by the Bailee.

Example:
               A delivers a rough diamond to B, a jeweller, to be cut and polished, which is
accordingly done. B is entitled to retain the stone till he is paid for the services he has rendered.
11. Sub-Agent
According to Section 191 of the Indian Contract Act, 1872 - A “sub-agent” is a person employed
by, and acting undue the control of, the original agent in the business of the agency.
Sub-Agent works under the control of the Agent. He is the agent of the Principle. Sub-Agent is
responsible to the Agent. There is no Privity of contract between the Principle and sub-agent.  
12. Specific Goods: These are goods that are specifically agreed upon between the seller and
buyer at the time of making the contract of the sale. For example, the seller may agree to sell the
buyer a specific item bearing a specific number. These are sometimes known as "ascertained
goods." This distinction becomes important because of the rules regarding the transfer of
property between parties.
As per Section 2(14) of the Sale of Goods Act, 1930, specific goods are those goods which are
specifically identified and ascertained by the buyer which he intends to buy at the time when the
contract of sale is formulated.

For example, Deepak wants to sell his old guitar. He put an advertisement in the local newspaper
with its picture, make and other details. Rahul agrees to buy the guitar and thereby formed a
contract with Deepak. The guitar is a ‘Specific Good’ in this case.
13. Nemo dat quod non habet
The literal meaning of the phrase “nemo dat quod non habet” means no one can give what he
does not have. Section 27[1] Of the  Sale of Goods Act, 1930 states that when any goods are sold
by a person who is not the real owner of the goods and sells them without proper authority and
consent from the real owner, the buyer acquires no better title to the goods than the seller had.
Further, Section 27 also provides an exception to the rule. Section 27 can be considered as a
general rule which protects the interest of the real owner. If there is any defect in the title of the
seller, the buyer will also inherit the same defect from the seller. But, this section does not imply
that the buyer title is always bad. The basic principle of this rule is that the buyer cannot acquire
a better title than the seller. For instance, if a thief sells off the stolen goods, the buyer will have
the same title as the thief who sold him the goods. 
14. Partnership at Will
When forming a partnership if there is no clause about the expiration of such a partnership, we
call it a partnership at will. According to Section 7 of the Indian Partnership Act 1932, there are
two conditions to be fulfilled for a partnership to be a partnership at will. These are

 There is no agreement about a fixed period for the existence of a partnership.

 No provision with regards to the determination of a partnership

So if there is an agreement between the partners about the duration or the determination of
the firm, this will not be a partnership at will. But if a partnership was entered into a fixed term
and continues to operate beyond this term it will become a partnership at will from the expiration
of this term.

15. Gratuitous Bailment

In this type of bailment, neither the bailor nor the bailee receives any remuneration. Such a
bailment may be for the exclusive benefit of either the bailor or the bailee. However, it terminates
on the death of either the bailor or the bailee.
Section 159 states that in the case of the gratuitous bailment, the bailor or the lender may require
the bailee to return the goods at any time, even before the expiration of the period of lending.
Also, he can do so even before the fulfilment of the purpose of bailment.
However, if the bailee or the borrower incurs any loss due to this act of the bailor, the bailor needs
to indemnify him for the loss or damages

16. Implied Authority of a Partner (Section 19)

If a partner does an act in the usual course of business of the firm, then his act binds the firm.
This authority of a partner to bind the firm is Implied Authority. Unless a contrary agreement
exists, implied authority does not empower a partner to (Section 19 – subsection 2 of the Indian
Partnership Act, 1932):
 Submit a dispute, relating to the business of the firm, to arbitration
 Open a bank account in his name, on behalf of the firm
  Compromise or relinquish, full or part of a claim by the firm
 Withdraw a suit or proceedings filed on behalf of the firm
 Admit any liability in a suit or proceedings against the firm
 Acquire an immovable property on behalf of the firm
 Transfer an immovable property belonging to the firm
 Enter into a partnership on behalf of the firm

Section 22 of the Indian Partnership Act, 1932, adds that the act which was done by the partner to
bind the firm must be done in the name of the firm or in any other manner which implies an
intention to bind the firm.
While the implied authority depends on the nature of the business of the firm, a partnership of a
general commercial nature may allow the partner to:

 Pledge or sell the partnership property

 Purchase goods on behalf of the partnership
 Borrow money, contract and pay debts on account of the partnership
 Draw, make, sign, endorse, transfer, negotiate and procure negotiable papers in the name
and on account of the partnership.
According to Section 20 of the Indian Partnership Act, 1932, the partners of a firm can make a
contract to extend or restrict the implied authority of a partner.

17. Compulsory Dissolution (Section 41):

A firm may be compulsorily dissolved under the following situations:
(i) Insolvency of Partners:
When all the partners of a firm are declared insolvent or all but one partner are insolvent, then
the firm is compulsorily dissolved.

(ii) Illegal Business:

The activities of the firm may become illegal under the changed circumstances. If government
enforces prohibition policy, then all the firms dealing in liquor will have to close down their
business because it will be an unlawful activity under the new law. Similarly, a firm may be
trading with the businessmen of another country. The trading will be lawful under present
conditions.

After some time a war erupts between the two countries, it will become a trading with an alien
enemy and further trading with the same parties will be illegal. Under new circumstances the
firm will have to be dissolved. In case a firm carries on more than one type of business, then
illegality of one work will not amount to dissolution of the firm. The firm can continue with the
activities which are lawful.
18. By Variance in the terms of the contract:

           Section 133 of the Indian Contract Act says that "any variance made without the surety’s
consent, in the terms of the contract between the principal debtor and the creditor, discharges the
surety as to transactions subsequent to the variance. It means Surety is not liable for the altered
contract.

Illustrations 

(a) A becomes surety to C for B’s conduct as manager in C’s bank. Afterwards, B and C
contract, without A’s consent, that B’s salary shall be raised, and that he shall become liable for
one-fourth of the losses on overdrafts. B allows a customer to over-draw, and the bank loses a
sum of money. A is discharged from his suretyship by the variance made without his consent and
is not liable to make good this loss.
19. No suit in a civil court by the firm or other co-partners against any third party
Section 69 of the Indian Partnership Act, 1932 offers a detailed explanation of the consequences
of not opting for firm registration.
If the firm registration is not done, then the firm or any other person on its behalf cannot file a suit
against a third party for breach of contract which the firm has entered into. Further, the person
filing the suit on behalf of the firm should be in the register of the firm as a partner.

20. Sale By Sample

In a contract of sale by sample, there is an implied condition that:

a. the bulk shall correspond with the sample in the quality;

b. the buyer shall have or shall be given a reasonable opportunity/chance of comparing the
bulk with the sample, and
c. the goods shall be free from any defect that may render them unmerchantable, which
would not be apparent on a reasonable examination of the sample. [Section (17)]
For example, a company sells certain belts made up of a special material by sample for the Indian
Army. The belts are found to be made up of plastic of cheaper quality, not discoverable by
ordinary inspection. In this case, the buyer is entitled to the refund of the price plus damages.
21. Difference between Sale and Agreement to sell

N                           Sale Agreement to Sell  

o
1 Meaning: where the Property immediately Meaning:  where the transfer of property
transferred from seller to buyer, it is called in goods is to take place in future, from
‘Sale’.    seller to buyer is called ‘Agreement to
Sell’.  
2 Definition: Sale can be defined as Definition: in case where the seller
“transfer of ownership in the goods by the agrees with the buyer to transfer the title
seller to buyer in exchange of price paid or of ownership on a future date upon
promised or partly paid and partly satisfying certain condition is called as
promised.   ‘Agreement to Sale’.  
3 Example: ‘X’ sold 10 bags of Wheat to ‘Y’ Example: ‘X’ agrees to sell 10 bags of
against payment of Rs. 3,000.  wheat to ‘Y’ for Rs.3,000  after getting  the
stock.
4 In contract of sale property in goods In agreement to sell, property in goods
transfers from seller to buyer immediately does not transfer immediately  
5 Contract of sale is an executed contract Agreement to Sell is an executory contract
6 It creates right in rem  It creates rights in personam
7 The seller can sue the buyer for case of The seller can sue the buyer only for
breach of contract. damages but not for the price.
8 Sale is liable for the Sale Tax. Agreement to sale is not liable for the Sale
Tax.
9 Seller has no right of resale. Seller has right of resale. 
10 If the goods are destroyed, the loss is borne The loss fall on the seller even though the
by the buyer even though the goods are in goods are in the possession of the buyer.  
the possession of the seller.