Special Contracts: Bailment and Pledge Agent, Agency and Principal - Partnership, Nature, Relationship of Partners, Relationship with

h third parties, and Dissolution of Partnership - Sale of goods: Conditions & Warranties, Difference between sale and hire purchase- Sale and agreement to sell Caveat Emptor.

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Special Contracts
Special contracts includes: Indemnity, guarantee, Bailment, Pledge and Agency.

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Bailment and Pledge

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Bailment
According to sec.148 of the Contract act,1872 The delivery of

goods by one person to another for some purpose upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. party (the bailor) to another (the bailee).

Definition - the temporary transfer of personal property by one The person delivering the goods is called the Bailor, and the

person to whom goods are delivered is called the Bailee.

Bailor Who gives Bailee Who takes Bailment - Transaction

Ex:

A delivers watch to B for repairs. A lends his book to B. Hiring Bicycle Giving cloth to a Tailor
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Special Types of Bailments

Pledge - security interest by possession. Warehouser - storer of goods for pay; must exercise reasonable care to protect the goods

and deliver them to the proper person. Safe Deposit Boxes Carrier of Goods - transporter of goods; a common carrier is an extraordinary bailee, while a private carrier is an ordinary bailee. Innkeeper - hotel or motel operator; is an extraordinary bailee except as limited by statute or case law.

Essential /Characteristics of Bailment

1. Delivery of possession goods
2. Delivery must be for some purpose 3. Return of goods

4. Only of movable property

5. No transfer of ownership

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Duties of the Bailor

1. To disclose faults in the goods bailed to the bailee

Duty of gratuitous bailor Duty of a non-gratuitous bailor

2. To bear the necessary expenses 3. To indemnify (assure) the bailee for breach of

warranty as to title 4. To indemnify bailee for loss in case of premature termination of gratuitous bailment 5. To receive back the goods
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Rights of Bailor
1. Right of termination of contract
2. Right to demand return of the goods 3. Right to compensation from a wrong doer

4. Right to get profits from the goods bailed

5. Right to enforce bailees obligations

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Duties of the Bailee

1. To take reasonable care of the goods bailed 2. Not to make any unauthorized use of goods bailed 3. Not to mix the goods bailed with his own goods

a) Mixing of goods of bailor with that of bailee with bailors consent. b) Mixing of goods without bailors consent, where the goods can be separated c) Mixing of goods without bailors consent, where goods cannot be separated

4. To return the goods 5. To return any increase or profit from the goods bailed 6. No to set up an adverse title
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Rights of the Bailee

1. To claim compensation in case of faulty goods 2. To claim necessary expenses 3. To seek indemnification 4. To sue a third pary 5. Right to interplead 6. Bailees lien 7. Right of delivery of goods to anyone of the several joint bailors 8. Right to indemnity for any loss arising to him by reason that bailor was not entitled to make the bailment or to receive back the goods.

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PLEDGE
According to sec.172, Pledge is the bailment of

goods as security for payment of a debt or performance of a promise.

The pledge is a special kinds of bailment. The bailor in this case is called the pawner. The

bailee is called the pawnee Pledge can be made only of movable properties.
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CONTRACT OF AGENCY [SECTION 182 238]

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Who is an `Agent`
An agent is defined as a "person employed to do any act

for another or to represent another in dealings with third person". In other words, an agent is a person who acts in place of another. The person for whom or on whose behalf he acts is called the Principal. Agency is therefore, a relation based upon an express or implied agreement whereby one person, the agent, is authorised to act for another, his principal, in transactions with third person. The function of an agent is to bring about contractual relations between the principal and third parties.
For example: A appoints B a broker to sell his Fiat car on his behalf. A is the principal and B, is his agent. The relationship between A and B is called Agency.
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WHO CAN EMPLOY AN AGENT

Any person, who is capable to contract may appoint

as agent. Thus, a minor or lunatic cannot contract through an agent since they cannot contract themselves personally either.

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CREATION OF AGENCY
(1) Express Agency
(2) Implied Agency (3) Agency by Estoppel

(4) Agency by Holding Out

(5) Agency of Necessity (6) Agency By Ratification

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 Express Agency (Section 187) A person may be appointed agent, either by word of

mouth or by writing. No particular form is required for appointing an agent. The usual form of a written contract of agency is the power of attorney on a stamped paper. Implied Agency (Section 187) Implied agency arises from the conduct, situation or relationship of parties. Implied agency,therefore, includes agency by estoppel, agency by holding out and agency of necessity

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 Agency by Estoppels (Section 237)

When a person has by his conduct or statements induced others to believe that a certain person is his agent, he is estopped from subsequently denying it.
Example: A owns a shop in Serampur, living himself in

Kolkata, and visiting the shop occasionally. The shop is managed by B and he is in the habit of ordering goods from C in the name of A for the purposes of the shop, and of paying for them out of As funds with As knowledge. B has an implied authority from A to order goods from C in the name of A for the purposes of the shop.

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 Agency by Holding Out:

Though part of the law of estoppel, some affirmative

conduct by the principal is necessary in creation of agency by holding out.

pays for them regularly. On one occasion, P pays his servant cash to purchase the goods. The servant purchases the goods on credit pocketing the money. C can recover the price from P since through previous dealings P has held out his servant A as his agent.

Example: P allows his servant A to buy goods for him on credit from C and

Agency of Necessity (Section 189)

This arises where there is no express or implied

appointment of a person as agent for another but he is forced to act on behalf of a particular person. Case: Great Northern Railway vs Swaflield

A horse was sent by rail and at the destination it was not taken delivery of by the owner. The station master had to feed the horse. Held, station master became the agent by necessity and hence the owner must compensate him.

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 Agency By Ratification (Sections 196-200)

Where an agent does an act for his principal but

without knowledge or authority or where he exceeds the given authority, the principal is not held bound by the transaction.

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DUTIES OF AGENT
To conduct the business of agency according to the principal's

directions The agent should conduct the business with the skill and diligence that is generally possessed by persons engaged in similar business, except where the principal knows that the agent is wanting in skill. To render proper accounts. To use all reasonable diligence, in communicating with his principal, and in seeking to obtain his instructions. Not to make any secret profits Not to deal on his own account Agent not entitled to remuneration for business misconducted. An agent should not disclose confidential information supplied to him by the principal [Weld Blundell v. Stephens (1920) AC. 1956]. When an agency is terminated by the principal dying or becoming of unsound mind, the agent is bound to take on behalf of the representatives of his late principal, all reasonable steps for the protection and preservation of the interests entrusted to him.
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RIGHTS OF AN AGENT
1.

Right to remuneration 2. Right Of Retainer 3. Right of Lien 4. Right of Indemnification 5. Right to compensation for injury caused by principals neglect

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TERMINATION OF AGENCY
1. By revocation by the Principal.
2. On the expiry of fixed period of time. 3. On the performance of the specific purpose.

4. Insanity or Death of the principal or Agent.

5. An agency shall also terminate in case subject

matter is either destroyed or rendered unlawful. 6. Insolvency of the Principal. Insolvency of the principal, not of the agent, terminates the agency. 7. By renunciation of agency by the Agent.
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General Principals

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Introduction
This Act extends to whole of India except the State of

Jammu and Kashmir It contains certain provisions relating to sale of moveable property Some special features of a contract of sale are dealt in this Act

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Contract of Sale (Sec 4) A contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price
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Essentials of a CoS
1.
2. 3.

4.
5.

Two parties Bilateral Contract Transfer of Property Price or money consideration All essential elements of a valid contract

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Sale vs Agreement to Sell

Executed contract
Transfer of property

Executory contract
Transfer of property at

immediately Loss of goods borne by buyer even if possession with seller On buyers failure to pay for goods, seller can sue for price even if goods are in possession of seller

future date Loss of goods borne by seller

On buyers failure to pay

for goods seller can sue only for damages and not for price

Sale vs Agreement to Sell

If seller breach , buyer can Buyer can sue for damages if

compel the seller to deliver goods or pay damages. The seller cannot resell the goods even if in his possession. Official assignee of the seller is bound to deliver the goods to the buyer as he is the real owner. If goods in possession of the seller he has to deliver it to the official receiver and he gets only a ratable dividend

seller breach Seller can deal with the goods but in case of breach the buyer will sue for damages Buyer cannot recover the goods from official receiver assignee even if paid the price, can only get a ratable dividend If buyer becomes insolvent, the seller will not hand over the goods to official assignee

Sale vs Hire Purchase

Transfer of ownership of The buyer becomes owner

property immediately after sale Buyer owner of goods Buyer cannot put an end to contract but has to pay the price Buyer can transfer valid title. In case price paid in installments then money paid is part payment Sales tax can be levied

only after he pays all the installments

Buyer in capacity of bailee Hire purchaser can set aside

the contract and stop payment of installments Hire purchaser cannot transfer a good title to a bonafide purchaser Instalments are part payment incase of breach it becomes hire charges. Sales tax cannot be levied

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Subject-matter of CoS
Subject matter of the contract of sale must be goods
Every kind of moveable property other than

actionable claims and money and includes stock and shares, growing crops, grass and things attached to or forming part of land which are agreed to severed before sale or under the contract of sale [section 2(7)]

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Goods & its types

Classification of goods (1) Existing goods (2) Future goods (3) Contingent goods

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Types of Goods
Existing goods - existing at the time of making the

contract of sale
(a) Specified goods - goods which are
identified

(b) Unascertained goods - goods which are

not identified and ascertained

(c) Ascertained goods - goods which are

ascertained or identified only after the formation of the contract of sales eg: cow

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Types of Goods
Future goods - goods which are to be manufactured

or acquired or produced by the seller after making the contract of sale

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Types of Goods
Contingent goods - contract of sale of goods the

acquisition of which by the seller depends upon the contingency(emergency) which may or may not happen

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Price
Price means the money consideration for a sale of

goods [section 2(10)] No sale of goods can take place without a price This price must be expressed in money terms

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