contracts 2 cases Flashcards

Question

Union Bank of India vs TJ Stephen

Answer 1

The Kerala High Court held that in a continuing guarantee, the liability of the guarantor to pay remains alive, as long as the principal debtor does not clear the account. As long as the debt is alive, the guarantor would be liable to pay. | continuing guarantee sec 129

Answer 2

A Bank Guarantee is an independent and distinct contract between the Bank and the beneficiary and is not qualified by the primary contract between the applicant and the beneficiary. In an unconditional bank guarantee, the obligation of the Bank is absolute and is not dependent upon any dispute or proceeding between the applicant and the beneficiary. The Courts should interfere only in exceptional cases, i.e., in case of fraud or if irretrievable injustice would result if a bank guarantee is allowed to be encashed. | bank guarantee ## Footnote also Nangia construction case

Answer 3

The Supreme Court held that there are two exceptions where the court can restrain the Bank from performing its obligation under a Bank Guarantee towards the creditor, i.e., Fraud; and Irretrievable Harm or Injustice. | **Bank of India vs Nangia Construction **

Answer 4

Customs authorities confiscated goods of two trucks and turns out it was obtained by false representation that the vehicles were unclaimed. When owner went to claim goods- they had been disposed of and The Supreme Court held that in this case there was bailment of vehicles even without an express contract. After the Revenue Tribunal had set aside the order of confiscation and directed the return of the said vehicles to the plaintiff, the government had a duty to do so. As the government had failed to return the vehicles, it was bound to pay compensation to the plaintiff.

Answer 5

After the plaintiff entered the defendant’s restaurant, a waiter took his coat from him and hung it on a hook behind the plaintiff from where it got lost. The plaintiff sued the defendant to recover the value of his coat. and it was determined that yes it was a case of bailment once the waiter took the coat out of owners possession. | bailment case

Answer 6

bro kept box full of jewels in bank informed bank abt its contents and then later when came to retrieve it turns ot=ut it missing and determined bank played role of bailee and failed so now must compensate.

Answer 7

The Chancery Division of the UK High Court held that handing over the keys of a godown by the bailor to the bailee amounts to constructive/symbolic delivery.

Answer 8

Atul Mehra vs Bank of Maharashtra-mere hiring of locker in bank by customer not equal to bailment under 148 , Jagdish Chandra Trikha vs Punjab National Bank, **National Bank of Lahore vs Sohan Lal** - if one key is with owner and anotehr key is with bank and goods go missing then the real control over goods goes missing - so bank is liable specially since agent tampered with locks | also sec238 of ica- liability of principal bec of act of agent

Answer 9

f one key is with owner and anotehr key is with bank and goods go missing then the real control over goods goes missing - so bank is liable

Answer 10

It was held that a bailee can never be in a better position than his bailor. Refusal on the part of the bailee to give up possession of the goods rightly claimed by a third party (owner) may make the bailee liable in an action for wrongful detention of goods. | Duty of Bailor when he has no Title (Section 164)

Answer 11

It was held that a bailee is not an absolute insurer of the safety of the goods bailed with him. **He cannot be held liable for damage caused to the goods by circumstances beyond his control.** | sec 152 Bailee not liable if he takes due care (Section 152)

Answer 12

The appellant had pledged bales of cloth with the bank. The respondent bailee (Bank) failed to take utmost care and, four bales of cloth went missing. The Gujarat HC held that the bank is liable despite the absolving clause of all liability, as diluting the reasonable standard of care is against the meaning and intent of Section 151. | sec151, 152

Answer 13

Cotton bales belonging to the consignee company were unloaded and kept outside the railway goods sheds and covered with a tarpaulin. The company did not take delivery of the goods despite repeated requests and 13 days after unloading, the bales caught fire due to unknown reasons. The railway staff took all possible steps to extinguish the fire but could not save the goods. ## Footnote not liable bec situation out of their control

Answer 14

The plaintiff entrusted some books to the defendant, a book binder, for binding. The defendant promised to deliver the books after binding within a reasonable time. However, the defendant failed to deliver the books within a reasonable time and they were burnt in an accidental fire on his premises. The defendant was held liable to pay damages to the plaintiff for the loss of books. ## Footnote similarly Prakash Roadlines Pvt. Ltd. vs Oriental Fire and General Insurance Company It was held that failure to perform the obligation of a bailee under a contract of Bailment makes the bailee liable, except when the loss is caused to the bailor due to an Act of God or Force Majeure

Answer 15

seller sold 2nd hand fridge to buyer and buyer failed to pay, later bec of some issues, the friedge wnet back to seller to be fixed and seller wanted to excersise right of lein then, but couldnt. It was held that the seller’s right of lien had come to an end when he had delivered the refrigerator to the buyer. This right was not revived by getting back possession of some parts of the refrigerator. zsec170

Answer 16

The Supreme Court observed that a Banker’s Lien on a customer’s negotiable securities has been judicially defined as an implied pledge. It was further held that a Banker has, in the absence of a contract to the contrary, a lien on all bills and cheques received from a customer in the ordinary course of banking business in respect of any balance which may be due from such customer. | similarly nakulan v DGM, canara bank ## Footnote but according to SBI v MP iron and steel - It was held that the deposit of money in a Bank by a customer does not create a relationship of bailor and bailee between the parties. Section 171 is confined to lien on bills of exchange, papers, securities, and other goods deposited with the Bank.

Answer 17

It was held that if a solicitor has not been discharged by his client, but he otherwise refuses to act for the client, or is unable to work for him (for ex: he stops his practice), the right of general lien available to him gets forfeited. | but accordinf to RD Saxena vs Balaram Prasad ## Footnote It was held that Section 171 is applicable to “goods bailed”. but Files and documents entrusted by a client to his Advocate are not “goods bailed” or “saleable goods” as defined in The Sale of Goods Act, 1930. so cannot have lien

Answer 18

It was held that if a solicitor has not been discharged by his client, but he otherwise refuses to act for the client, or is unable to work for him (for ex: he stops his practice), the right of general lien available to him gets forfeited. | but accordinf to RD Saxena vs Balaram Sharma ## Footnote It was held that Section 171 is applicable to “goods bailed”. but Files and documents entrusted by a client to his Advocate are not “goods bailed” or “saleable goods” as defined in The Sale of Goods Act, 1930. so cannot have lien

Answer 19

In this case, the plaintiff hired the defendant to make new jewellery for her. Her old jewels had to be melted and the gold obtained from that was to be used to make this new jewellery. Every evening, the defendant would return the half-made jewellery to the plaintiff. Plaintiff would lock that jewellery in her box and leave it in the defendant’s room. However, the Plaintiff took the key to that box. One night, the jewels were stolen. The defendant was held liable by the plaintiff as he was the bailor of the goods. It was held that the respondent was not liable as he did not have legal possession of the goods while they were stolen. The relationship was of bailment between both the parties but it ended as soon as the plaintiff locked the goods in the box and took the keys with herself. **Merely leaving the box at the defendant’s house does not constitute bailment.**

Answer 20

* Facts: The producer of the film agreed to deliver fine prints of the film under production, when the same are ready to a financer in return of finances. * Issue: Is this Valid Pledge? * Held: No, as there is no actual or constructive delivery of Goods.

Answer 21

Facts: The firm borrowed a sum of Rs. 20,000/- from the Appellant bank and gave the railway receipts of the goods which were in transit to constitute a security for the loan. The goods were lost during the transit. * Issue: Delivery of Railway receipts constitutes as valid pledge? * Held: Yes. They are enough to constitute a delivery. | similarly in Purushotam Das Vs. Union of India ( with fake railway recie

Answer 22

Kuri Lal Rungta vs. Banarasi Devi ( AIR 1986 All. 94 ) * If certain securities have been deposited with the lender and it is further agreed that the lender will have a right to lien over those securities, that does not debar the lender from filing a suit against the borrower and obtaining a personal money decree against the borrower

Answer 23

The pawnor’s right to redeem is lost/extinguished only when pawnee makes an actual sale of goods by the virtue of his right under Section 176 of the Act. When the pawnee files a suit for recovery of the debt, though he is entitled to retain the goods, he is bound to return them on the payment of the debt. | PAWNOR’S RIGHT TO REDEEM.

Answer 24

Bank of Maharashtra v Racman Auto, State Bank of India v Smt. Neela Ashok Naik, K.M Hiyatulla v Bank of India | pawnee has full descretion to sell or not to sell/keep goods

Answer 25

There was an agreement between the bank and the customer, authorizing the bank to sell the securities pledged without any notice to the pawnor, if the credit balance of the pawnor falls below a certain limit. Held: It was held that such a provision is bad in law. It would be inconsistent with the provisions of the Contract Act and would be void and unenforceable

Answer 26

Facts: Due to the negligence of the pledgee bank, the pledged goods were lost. The bank was requested by the pawnor to sell away the goods and to realize the balance, but the bank failed to do so. Moreover, now the bank was not in a position to redeliver the goods on the satisfaction of its claims. Issue: Was the bank liable for the loss of the goods or was it still in position to seek claims against the pawnor? Held: Bank was liable for the loss and was not entitled to succeed in claims against the pawnor

Answer 27

An agent has the authority to act on behalf of his principal and to create contractual relations between the principal and a third party. This kind of power is not generally enjoyed by a servant. 2. A principal has the right to direct what the agent has to do; but a master has not only that right, but also the right to say how it is to be done. A servant acts under the direct control and supervision of his master 3. servant will usually work for wages, and agent = comission 4. A master is liable for a wrongful act of his* servant* if it is committed in the **course of the servant's employment.** A principal is liable for his *agent's* wrong done within the **"scope of authority**

Answer 28

An agent has the authority to act on behalf of his principal and to create contractual relations between the principal and a third party. This kind of power is not generally enjoyed by a servant. 2. A principal has the right to direct what the agent has to do; but a master has not only that right, but also the right to say how it is to be done. A servant acts under the direct control and supervision of his master 3. servant will usually work for wages, and agent = comission 4. A master is liable for a wrongful act of his* servant* if it is committed in the **course of the servant's employment.** A principal is liable for his *agent's* wrong done within the **"scope of authority**

Answer 29

just calling relationship agency not equal to actual agency and court must observe the actual nature of relationship as well

Answer 30

where a woman allowed her son to drive a car for her, she paying all the expenses of maintenance and operation, it was held that the son was an implied agent of the mother and when he made a collision injuring his wife, the wife could sue the mother for the fault of her agent. I

Answer 31

it was held that A husband has no original, inherent or implied power to act as an agent for his wife. His authority can arise from an appointment as agent, expressly or impliedly, or by ratification by his wife of acts done by him on her behalf. Accordingly, a wife was held not liable on a contract made by her husband in her name and without her authority when she disaffirmed the contract within reasonable time after getting to know of it. **A husband has no implied authority to sell his wife's property**

Answer 32

Where the plaintiff was claiming damages and relief for rent and other expense for space which had been reserved in its cold storage by the company for the storage of Government potatoes but no potatoes had been sent for storage as the person who entered into contract on behalf of government was not duly authorised

Answer 33

an offer to sell the property was accepted by some members of a charitable institution subject to the approval of the institution. Before the offer could be finally accepted by the institution, it was withdrawn and it was held to be revocable.

Answer 34

A commission agent purchased goods for his principal and stored them in a godown pending their despatch. The agent was under instruction to insure them. He actually charged the premium for insurance, but failed to insure the goods. The goods were lost in an explosion in the Bombay harbour. Thus, in such cases the agent is held liable to the principal for the amount which would have been recovered if the goods had been insured.

Answer 35

when an agent sells his principal’s goods, he may detain moneys received, for his remuneration on account of the goods sold by him. Such right can be exercised by an advocate also but the lien must be confined to the costs incurred in that particular case. | sec217, 218

Answer 36

it has been held that if the parties have agreed that the agent will be entitled to commission when he finds a purchaser, who is ready and willing to purchase the property, the agent becomes entitled to the commission on doing that. It does not matter that the principal refused to sell the property to the prospective purchaser or the sale could not be completed because of the purchaser’s inability to find money | sec

Answer 37

it has been held that if the parties have agreed that the agent will be entitled to commission when he finds a purchaser, who is ready and willing to purchase the property, the agent becomes entitled to the commission on doing that. It does not matter that the principal refused to sell the property to the prospective purchaser or the sale could not be completed because of the purchaser’s inability to find money | sec217,218

Answer 38

The agent's lien does not give unrestricted authority to the agent to deal with the property in any manner the agent may like. The right is limited in nature. It enables the agent to retain the property till his dues are paid. But this confers no authority on the agent to sell or otherwise dispose of the property without the consent of the owner | sec217,218

Answer 39

the principal called applications for booking cars. The agent received applications with cheques drawn in favour of the principal. The claim of the petitioner was that he filed an application along with the cheque, but neither he received the car nor refund. The plea of the agent that the liability was of the principal and not his was held to be proper.

Answer 40

agent sued when principal known, the agent challenged it before the Supreme Court for the first time. Section 230 accordingly provides: In the absence of any contract to that effect, an agent cannot personally enforce contracts entered into by him on behalf of his principal, nor is he personally bound by them. Agent cannot sue or be sued unless contrary contract

Answer 41

If the agency is created for a fixed period or continuous, the principal must give a reasonable notice of revocation of agency to the agent. ( Section 206) The requirement of notice is mandatory ## Footnote termination of agency sec201-210

Answer 42

AGENTS lien doesnt give agent unristricted authority to deal w property however they like-- it is limited in nature and allows agent to retain the properrty till the principal pays his dues. ## Footnote sec217,218

Answer 43

the question involved in this case was whether electric energy could be considered to be “goods” for the purpose of Sales Tax. It was held that although electric energy is not tangible and cannot be touched like a piece of wood or book, it still falls under the definition of “goods” as it can be transmitted, transferred, delivered, stored, and possessed in the same way as any other movable property. | similarly jabalopur cable v ESPN ## Footnote section 2 SGA= any moveable property is under sales of goods act

Answer 44

The MP High Court held that electronic TV signals are a form of energy just like electricity and fall within the definition of goods which can be the subject matter of sale. Supplying Cable TV Signals is a sale of goods as defined in Section 2(7) of the Sale of Goods Act, 1930. Such signals constitute movable property. ## Footnote similarly, The Commissioner of Sales Tax, MP vs MP Electricity Board

Answer 45

dude wanted cow that got him specicif type of milk quality and mentioned that - the cow he was sold did not have it and cow is under sga so conditions breached ## Footnote sec12, 16 of sga

Answer 46

there was a sale of foreign refined rape-oil. The delivered oil was the same as the sample but it was having a mixture of other oil too. It was held in this case that the seller was liable to refund the amount paid. | section 15 sga

Answer 47

dude bought a fogging machine to kill ants and did not pay or communicate w seller- USED IT for 6 months and then says ur machine is faulty im returning it and wont pay HELD: liable to pay for the fogging machines and they could not legitimately return the machines after using them for 6 months. Section 42 of the Sale of Goods Act, the act of receiving the machines after demonstration, using them, and retaining them for a long-time amount to valid acceptance. ## Footnote section 13- acceptance of goods by buyer and sec 42

Answer 48

2018 :where the purchaser after obtaining the delivery of a property has to pay either the entire or part consideration amount to the seller, if not then the unpaid seller will have lien over the said property and under these circumstances, it can be said that by not making the payment of remaining consideration amount and by constantly using the property so delivered by the seller, the act of buyer would certainly amount to criminal breach of trust because the position of the buyer would be that of trustee so long as he does not pay the entire consideration amount. | section 47 sga

Answer 49

dude said he wanted car for touring purpose merchant said this bughatti is good for that but turns out its horrible for that purpose so he can sue as it was a specific condition perhaps even under section 16 sga

Answer 50

per Section 4 of the Indian Partnership Act, “the business of the firm should be conducted by all the partners or by any of the partners acting on behalf of the others”. Hence, the principle of “agency” is implied here. * In this case, though the authority to conduct and run the business is vested in the first partner, K.D. Kamath, but he is acting for all the other partners and must do so in common interest of all | partnership act

Answer 51

It was held that although the creditors were sharing the profits and the business was being managed by the trustees, still the relation between Smith and Son on one hand and the creditors (including trustees) on the other was that of debtor and creditor, and not that of partners. Therefore, Cox and Wheatcroft could not be made liable. | sec6 of partnership

Answer 52

In this case, it was held that if a partner retired on 1st April 1982 and the act of the firm was done on 1st March 1985, Section 25 cannot be applied to make such a retired partner liable for an act done after his retirement IF retirement notice is made public

Answer 53

in India, a government debt is not entitled to precedence over a prior secured debt. * It was further held that the partners of a firm cannot be held individually liable for the payment of sales tax assessed against the firm

Answer 54

dude was minor and whle he was minor the firm became indebted to shivagouda and firm dissolved. Chand became major and didnt excersise right or put up notice of not becoming partner but STILL HELD: not liable because he attained majority only after dissolution of firm ## Footnote sec30 of indian partnership act

Answer 55

the death of a partner automatically dissolves the firm of two members | sec35 indian partnership act

Answer 56

t on the retirement of a partner, even when his share is determined and consideration is paid, a partner has a right only to get his share of profits during the period that a partnership subsists and will not have a personal control over the property | sec 37 of indian partnership

Answer 57

unregistered firm complaints cannot come under indian partnership act but instead a private complaint for criminal matter- since the case was about a cheque bouncing which is criminal

Answer 58

The Punjab and Haryana High Court held that the petitioner is seeking the dissolution of firm on just and equitable grounds as covered under Section 44 and not as per the terms of the partnership deed. so even though there is an arbitration clause it is not applicable