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Chapter-I

THE INDIAN CONTACT ACT, 1872

The laws relating to contract is contend in the Indian Contract Act,

1872

Definition I. Contract:

Contract S.2 (h) - “Contract is an agreement enforceable by law”.

So every agreement enforceable by law is contract.

Contract = Agreement + Legal enforceability

II. Agreement

S.2 (e) – Every set of promises forming consideration for each other.

Agreement = Offer + Acceptance

III. Essential element of a valid contract

S.10 enunciates elements of a valid contract which are as follows:-

1. Offer and Acceptance – There must be two parties to an

agreement i.e., One party making an offer and the other party

accepting it.

2. Intention to create a legal relationship- in commercial and

business agreements, the presumption is usually that the parties

intended to create legal relationship. When two parties enter into

an agreement there intention must be to create legal relationship

between them. So agreements of a social or domestic nature

are not contracts.

3. Lawful consideration- ‘consideration’ means an advantage or

benefit moving from one party to the other. It is the essence of

contract. It need not be necessarily be cash or kind. It may be

an act or abstinence; it must be real and lawful to form a valid

contract.

4. Capacities of the parties-competency (S.11) - The parties to

an agreement must be capable of entering into a valid contract.

Every person is competent to contract. If he (a) is of the age of


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majority (b) is of sound mind (c) is not disqualified from

contracting by law.

5. Free and genuine consent (S.13-22) - The consent of the

parties is said to be free when they are of the same mind on all

material terms of contract. The parties must be at ad idem.

Consent is said to be free when it is not caused by (1) coercion

(2) undue influence (3) fraud (4) mispresentation (5) mistake.

6. Lawful object (S.23) - A contract must not only be based

upon mutual assent of competent parties but must have lawful

object. Otherwise the agreement is unenforceable. The object is

lawful when it is not (a) illegal (b) Immoral (c) opposed to public

policy.

7. Agreement not declared void (SS. 24-30, S.56) - The

agreement must not have been declared void expressly by any

law in force in the country. A void agreement is one which is not

legally enforceable.

8. Certainty and possibility of performance (S.29) - The

agreement must be certain and not vague or indefinite (S.29). If

it is vague and it is not possible to ascertain its meaning, it

cannot be enforced. 9. Legal formalities- A contract may be made by words spoken or

written. As regards the legal effects there is no difference

between the two. It is however in the interest of the parties that

the contract should be in writing. In some cases the document

in which the agreement is incorporated must be stamped and

registered.


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CHAPTER-II

OFFER AND ACCEPTANCE

Offer Definition: - S.2 (a) - offer is the willingness of one person to do or to

abstain from doing anything, with a view to obtaining the assent of the

other to such act or abstinence.

So offer is a proposal.

Example: A says to B ‘will you purchase my horse for Rs.1000/-’

Who makes the offer is called offerer or proposer.

To whom offer is made is called offeree or proposee.

When the offeree accepts the offer the offerer becomes the

promisor and the offeree becomes the promisee.

HOW AN OFFER IS MADE Express offer : By express words, spoken or written.

Implied offer: By the conduct of parties or circumstances of the case.

TYPES OF OFFER

1. Specific Offer – When the offer is made to a definite person, it is

called a specific offer. It can be accepted only by the person to

whom it is made.

2. General Offer – When the offer is made to the whole world at

large it is called general offer .where an offer is made to the whole

world at large any persons or person of offer may come forward

and accept the offer. (Carlill vs. Carbolic Smoke Ball Co)

Legal Rules as to offer 1. It must give rise to legal relation: Offer must be such as in law

is capable of being accepted and give rise to legal relation. A

social invitation is not an offer.


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2. The terms of offer must be definite, unambiguous and certain: Example –A says to B “I will sell you a car” A owns 3

different cars .the offer is not definite.

3. Declaration of intention or announcement is not an offer: A

declaration by a person that he intends to do something is not

legally enforceable e.g., an advertisement for concert.

4. An invitation to offer is no offer: A News paper advertisement

except reward advertisement, display of goods, tender,

catalogues, quotation, auction sales are not offer but an invitation

to offer. They invite the public to make an offer. (Case law Pharmaceutical society of Great Britain v. Boots Cash

Chemist) 5. Offer must be communicated: An offer to be complete must be

communicated to the person to who it is made. An offer must be

communicated to the offree by the offeror or by his duly

authorized agent for acceptance.

An acceptance of an offer is ignorance of the offer is no

acceptance and does not confer any right on the acceptor. (Fitch

v. Snedaker) 6. Offer must be made with a view to obtaining the assent: The

offer to do or not to do something must be made with a view to

obtaining the assent of offree.

7. Offer should not contain a term the non-compliance of which may be assumed amount to acceptance-

The offer cannot say that its acceptance is not communicated by a

certain time, the offer should be considered as accepted. e.g., A

writs to B “I will sell you my horse for Rs.5000/- and if you do not

reply, I shall assume you have accepted the offer”.

8. A statement of price is not an offer: A mere statement of price

or quotation of the lowest price is not an offer (Harvey v. Facey). 9. Special terms of contract must be mentioned at the time of

the offer: Special terms which are to be included in a contract

there must be a duly brought to the notice of the offree at the time

when the proposal is made. If it is not done and the contract is


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subsequently entered into, the offeree will not be bound by them.

Also this term should be presented in such a manner that a

reasonable man can become aware of them before he enters into

the contract. (e.g., Railway tickets contain the conditions on its

back).

Acceptance

According to S.2 (b) “When the person to whom the proposal is

made signifies his assent thereto, the proposal is said to be accepted. A

proposal, when accepted, becomes a promise.

Effects of Acceptance:

The offeror is not bound thereby until acceptance. As soon as the

proposal is accepted the parties becomes bound by the terms of offer.

Lord Anson “Acceptance to an offer what a lighted match to a train of

gun powder. It produces something which cannot be recalled or undone.

LEGAL RULES AS TO THE ACCEPTANCE OR ESSENTIAL OF VALIED ACCEPTANCE:

1. It must be absolute and unqualified: It must conform to the offer

in terms of all material or immaterial, major of minor terms. e.g., A

says to B, “I offer to sell my car for Rs.50, 000/- “B replies “I will

purchase it for Rs.45, 000/- “This is no acceptance and amounts

to a cross offer.

2. It must be communicated to the offeror: Acceptance must be

communicated in some perceptible form. A mere resolve or

mental acceptance is no acceptance.

3. It must be according to the mode prescribed or usual and reasonable mode: When the mode is prescribed the acceptance

must be made with the prescribed mode if no mode is prescribed

it must be made in usual or reasonable mode.

4. It must be given within specified time limit: When the time is

prescribed acceptance must be made within the prescribed


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period. If no time limit is prescribed acceptance must be made

within a reasonable period of time.

5. It cannot precede an offer: If the acceptance precedes an offer

it is not a valid acceptance and does not result in a contract.

6. It must show an intention on the part of the acceptor to fulfill terms of promise: If no such intention is present, the acceptance

is not valid.

7. It must be given before the offer lapses of before the offer is withdraw

8. It cannot be implied from salience: The acceptance of an offer

cannot be implied from silence of the offeree or his failure to

answer. (Harvey V. Facey).


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CHAPTER-III

CONSIDERATION

Introduction:

Consideration is one of the essential elements to support a contract.

An agreement made without consideration is a nudum pactum (a nude

contract) and it void. Technically consideration means something in return.

Pollock’s defined “Consideration to be a price for which a promise is bought”.

Definition S.2 (d):

When at the desire of the promisor, the promise or any other person

has done or abstained from doing or does or abstains from doing, or promises

to do or to abstain from doing, something such act or abstinence or promise is

called a consideration”. e.g., A agrees to sell his horse to B for Rs.5000/-.

Here horse is the consideration for B and price is the consideration for A.

Why consideration is essential or need for consideration: The reason

why the law enforces only those promises which are made for consideration

is that gratuitous or voluntary promises are often made rashly and without due

deliberation “something for nothing’ has no validity under the eye of law. It

supplies no means nor affords any remedy to compel the performance of an

agreement made without sufficient consideration.

Legal rules as to consideration 1. It must move at the desire of the promisor: It is essential that the

consideration must have given at the desire or request of the promisor,

rather than merely voluntary or at the instance of some third party.

2. It must move from the promisee or any other person: Under the

Indian law, consideration may move form the promisee or any other

person i.e., even a stranger. This means that as long as there is

consideration for a promise it is immaterial who has furnished it. But

stranger cannot sue. (Chinnaya V. Ramayya).


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3. It may be an act, abstinence or forbearance or a return promise: (i)

an act i.e. doing of something in this sense consideration is in an

affirmative form. (ii) An abstinence – abstaining or refraining from doing

something. In this sense consideration is a negative form. They are as

follows-

I. Forbearance to sue: It is a good consideration e.g., A promises

B not to file a suit against him if he pays him Rs. 500/-. The

abstinence of A is the consideration for B.

II. Compromise of a disputed claim: Compromise is a kind of

forbearance provided the claim should be reasonable and the

person claiming should honestly believe that it is a valid claim. He

should also act bona-fied.

III. Composition with the creditor: A debtor who is financially

embarrassed may call a meeting of his creditors and request them

to accept a lesser amount. If the creditors agree, the agreement

is bound upon them.

4. It may be past present or future:

I. Past consideration: When the consideration by a party for a

present promise was given in the past, i.e., before the date of the

promise, it is said to be past consideration. A past consideration

is a good consideration under the Indian Contract Act.

Example: A render some service to B at latter’s desire. After a

month B promises to compensate A for the services rendered to

him.

II. Present or executed consideration: When a consideration is

given simultaneously to the promise that is at the time of the

promise, it is said to be present consideration.

Example: sell of goods for cash.

III. Future or executory consideration: when the consideration

from one party to the other is to pas subsequently to the making of

the contract it is future or executory consideration.


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Example: D promises to deliver certain goods to P after a week P

promises to pay the pries after a fortnight.

5. It need not be adequate: Consideration means “Something in return”.

It must have some value in the eye of law. It need not be equal in

value to the promise made. It is for the parties to see its adequacy. Example- A agrees to sell a horse worth Rs.10000/- for Rs.100/- A’s

consent to the agreement was freely given.

6. It must be real and not illusory: There is no real consideration if it is

impossible to perform physically, legally or if it is uncertain and illusory. 7. It must be something which the promisor is not already bound to

do: So it cannot be (i) The promise to perform an already existing

contractual duty or, (ii) Pre existing legal duty or public duty by a public

servant.

8. It must not be illegal immoral or opposed to public policy S.23:

The consideration given for an agreement must not be unlawful. If will

be unlawful when it is illegal, immoral or opposed to public policy.


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CHAPTER-IV

FREE CONSENT Introduction

It is essential to the creation of a contact because the parties are ad

idem, i.e., they agree upon the same thing in the same sense at the same

time and there consent is free and real. So free consent is an essential

element of contract.

Free consent

S.14: Consent is said to be free when it is not caused by

I. Coercion (S.15)

II. Undue influence (S.16)

III. Fraud (S.17)

IV. Misrepresentation (S.18)

V. Mistake (S.20, 21 &22)

When there is no consent, there is no contract. I. Coercion: When a person is compelled to enter into a contract by the

other under:

a. Threat

b. Fear

c. Physical compulsion

d. Detaining of goods or property

Coercion is said to be employed. Generally these acts are forbidden by IPC,

1960. Threat to commit suicide is also coercion.

Example: A forced B to sign a promissory note at the point of pistol.

II. Undue influence:

In special kinds of relationship where one party is capable to dominate the will

of another party due to his position, undue influence is said to be exercised.

The relationships are:


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1. Authoritarian position: Master and servant

2. Fiduciary relation: It is the relation of trust and confidence.

Example:

a. Father and son

b. Solicitor and client

c. Spiritual advisor and disciple.

3. Mental capacity affected due to reason of age, illness or mental

distress. Example: Medical attendant and patient.

III. FRAUD

A false representation is made:

a. Knowingly or

b. Without believe in its truth or

c. Recklessly

d. By active concealment of material facts with the intention to

deceive the other party is called fraud.

Essential of fraud

There must be a representation or assertion and it must be false

The representation must be relates to material facts.

The representation must have been made before the conclusion of the

contract.

The statement must have been made knowingly without believing in its

truth.

The other party must have been must have been induced to act upon

it.

The other party must have been relied upon the representation.

The other party by acting upon it must have suffered some loss.

IV. Misrepresentation:

A representation when wrongly made innocently or unintentionally is

misrepresentation.

Requirements:


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1. It must be a representation of mental fact

2. It must be made before the conclusion of contact.

3. It must actually have been acted upon.

4. It must be wrong but the person who made it honestly believed it

to be true.

5. It need not be made directly to the plaintiff. A wrong statement

of fact made to a third person with the intention of

communicating it to the plaintiff, also amount to

misrepresentation.

Example: A, while selling his horse to B, tells him that the horse

is sound. A genuinely believes that the horse is sound. Later B

finds the horse to be unsound. The representation made by A is

misrepresentation.

V. MISTAKE:

Mistake may be defined as an erroneous belief about something.

Mistake is of following types

Mistake

Mistake of law Mistake of

facts

Unilateral mistake Bilateral mistake

Example: A agreed to purchase B’s motor car which was lying in B’s garage

unknown to either party, the car and the garage were completely destroyed

then the agreement is void.


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CHAPTER-V

LEGALITY OF OBJECT AND CONSIDERATION:

One of the essential of a valid contract is that the consideration and the

objects should be lawful. Every agreement of which the object or

consideration is unlawful is void.

When the consideration or object is unlawful (S.23):

1. If it is forbidden by law: An Act is forbidden by law when it is punishable

by the criminal law of the country or when it is prohibited by special

legislation or negotiation.

2. If it is defeats any provision of law.

Example: An agreement by a debtor not to raise the plea of limitation is

void.

3. If it is fraudulent: An agreement which is made for fraudulent purpose is

void.

Example: A, B and C enter into an agreement for the division among

them the gains acquired, by them by fraud.

4. If it involves or implies injury to the person or property of another: injury

means ‘wrong’, ‘harm’, or ‘damage. Person means one’s body.

Property includes both immovable and movable property.

Example: Proprietors of a newspaper agreed with the printers to

indemnify the later against consequences arising from libels printed in

newspaper. The agreement is void.

5. If the court regards it as immoral.

Example: Agreement of future separation between husband and wife.

Sexual immoralities.

Furtherance of sexual immoralities.

6. When it is opposed to public policy: An agreement is said to be

opposed to public policy when it is harmful to the public welfare, public

good or public interest.

These are

i. Agreements of trading with enemy.


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ii. agreement which interferes with the administration of

justice

(a) Stifling prosecution (b) bribery or influencing judge

(c) maintenance and champerty

iii. Agreement in restraint of parental right.

iv. Agreement in restraint of legal proceedings .(S28)

v. Agreement in restricting the personal liberty.

vi. Agreement in restraint of marriage.

vii. Agreement in restraint of trade.(S27)

Agreement in restraint of trade [S.27]

Every agreement, by which anyone is restrained from exercising a

lawful profession, trade or business of any kind, is to that extent void.

Public policy requires that every man should be at liberty to engage

him in any lawful trade or profession and should not be deprived from the trait

of his labour, skill talent by any agreement he enter into. It is also in the

interest of the community that every man should be at liberty to engage

himself in any trade, profession, or business and use his skill to the best of his

capacity consistent with the good of the community, so an agreement in

restraint of trade is void to that extent.

Exceptions: However some reasonable restriction is justified, if it is in interest

of public.

1. Sales of goodwill: A seller of goodwill of a business may be restrained

from carrying on (i) Similar business (ii) within specified local limits.

2. Partner’s agreement:

a. A partner shall not carry on any business other than that of

the firm while he is a partner. S. [11 (2) of The Indian

Partnership Act]

b. An outgoing partner may agree with his partners’ not to

carry on any business other than that of the firm within a

specified period or within a specified local limits S36(2).


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c. Partners may, upon or in anticipation of the dissolution of

the firm, make an agreement that some or all of them will

not carry on a business similar to that of the firm within a

specified period or within specified period or within

specified local limit. [S.54 Indian Partnership Act, 1932].

d. Any partner may, upon the sale of goodwill of a firm, make

an agreement with the buyer that such partner will not carry

or any business similar to that of the firm within a specified

period or within specified local limits,. S.55 (3). In case of

(b), (c), and (e), the court will enforce such agreement only

if the restrictions imposed are reasonable.

3. Trade combination or trade regulation: Traders and manufactures in

the same line of business normally form association to regulate

business or to fix prices. The regulation are regarding the (i) opening

and closing of market (ii) licensing of traders (ii) supervision and control

of dealers (iv) mode of dealing ae not unlawful even it they are in

restraint of trade.

But a combination which tends to create monopoly and w2hich is

against public interest is void.

4. Service contracts: sometimes an employee, by the terms of his

service agreement is prevented from accepting:

I. Any other engagement during his employment.

II. A similar engagement after the termination of service if the

restraint is intended to protect an employer against an

employee making use of trade secrets learned by him in the

course of his employment. These agreements are valid in

the eye of law.


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Chapter-VI DISCHARGE OF CONTRACT

Discharge of contract means termination of the contractual relationship:

A contract is said to be discharged, when it ceases to operate, i.e., when the

rights and obligation created by it come to an end.

Various ways of discharge of contracts:

1) Discharge by performance

2) Discharge by mutual consent

3) Discharge by impossibility of performance

4) Discharge by operation of law

5) Discharge by breach of contract.

6) Discharge by Novation, rescission, and alternation.

1. Discharge by performance: If parties to the contract perform their

respective obligation according to the term of the contract, within time

and in the manner prescribed the contract is discharged.

Performance of contract is the most usual mode of its discharge. It is of

two type (i) Actual performance and (ii) Anticipatory performance.

Actual performance: When both the parties perform their promises,

the contract is discharged.

Attempted performance or tender: Tender is not actual performance

but is only an offer to perform, the obligation under the contact. Where

the promisor offers to perform his obligation, but the promise refuses to

accept the performance, tender is equivalent to actual performance

except in tender of money.

2. By mutual agreement or consent: As it is the agreement or consent

of the parties which bind them, so by the further agreement or consent

the contract may be terminated. The rule of law is a thing may be

destroyed in the same manner in which it is constituted. 3. By impossibility of performance:

I.Initial impossibility: It is the impossibility existing at the time

of contract. An agreement to do an impossible act is void.

So parties are discharged from performance.


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II. Subsequent or supervening impossibility: These are the

impossibility which arises subsequent to the formation

contract. It is also called post-contractual impossibility. In

such case the contract becomes void impossibility of

performance of contract, as a general rule, is no excuse for

the no performance of contract, but where this impossibility is

caused by the circumstances beyond the control of the

parties, the parties ore discharged form further performance

of the obligation arising under contract.

Circumstances of supervening impossibilities:

a. Destruction of the subject matter.

b. Charge in the state of a thing

c. Outbreak of war.

Exception: Commercial difficulties, failure of third person or whose

works the promisor relied, strikes, lock-out are not included in

impossibility of performance. So the contract is not discharged.

4. Discharge by operation of law:

I. By death: The man life being the implied condition of contract,

by his death, the contract is discharged.

II. By merger: Merger takes place when an inferior right accruing

to a party under contract merger into a superior right accruing to

the same party under the same or other contract.

III. By insolvency: when a person is adjudged insolvent, he is

discharged from all liabilities incurred prior to his adjudication.

5. Discharge by breach of contract or repudiation:

When a party having duty to perform a contract fails to do that or

does an act whereby the performance of the contract by him becomes

impossible of he refuses to perform the contract that is said to a breach

of contract.

On the breach of contract by one party, the other party, is

discharged form his obligation to perform his part of contract. He also


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gets a right to sue the party, making the breach of contract for

damages for the loss occasioned to him due to the breach.

Breach is at two types:

I. Actual breach: Non-performance of contract on the due date of

performance.

II. Anticipatory breach: Before the due date of performance

[Forst vs. Knight] 6. Discharge by Novation, recession, alternation, remission

Discharge by Novation: Novation takes place when a new contract is

substituted for an existing one between the same parties. Then the

parties are discharged from the performance of the previous contract.

Novation would take place before the expiry of the time of the

performance of the time of the performance of the original contract.

Rescission: Recession of contract takes place when all or same of the

terms of the contract are cancelled, then the contract is discharged.

Example: A promises to supply contain goals to B six months after

date. By that time, the goods go out of fashioned. A and B may rescind

the contract.

Remission: Remission means acceptance of a lesser fulfillment of

promise made e.g., acceptance of a lesser sum than what is

contractual for.

Example: A owes B Rs.5000/- A Pays to B and B accepts Rs.2000/- in

satisfaction of the whole debt at the prescribed time and place. The

whole debt is discharged.


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CHAPTER-VII

CONTRACT OF INDEMNITY AND GUARANTEE What is the contract of indemnity and how it differs form the contract of

guarantee?

INTRODUCTION:

Contract of indemnity is a species of general contract. It must as such

have all the essential elements of a valid contract laid down under S10 of

Indian contract Act 1872.

DEFINITION:

S.124: A contract, by which one party promises to save the other party

from a loss caused to him by the conduct of the promisor himself or by the

conduct of any other person, is called the contract of indemnity.

ESSENTIAL INGREDIENTS:

1. The person who promises to make good the loss: Indemnifier

(Promisor)

2. The person whose loss is to be made goods: indemnified or indemnity

holder (promisee)

3. Occurrence of loss: may be by the conduct of the promisor or third

party.

4. Loss must be caused to the promisee.

The primary objectives of the contract of indemnify is to protect the

promise against anticipated loss. It is a direct engagement between two

parties. The definition of indemnity. Under Indian Contract Act, 1872 deals

with a particular kind of indemnity which is used in a narrow sense. The

intentions of legislature are strictly interpreted here. In only includes (i)

Express promises to indemnify, (ii) cases where the loss is caused by the

conduct of the promisor or any other person.


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It does not include:

a. Implied promises to indemnify and

b. Loss caused by accident.

So contract of insurance is out of the preview of this definition.

Contract of indemnity in English law:

“Promises to save another harmless from the loss caused as a result of

transaction entered at the instance of the promisor”.

It includes both express and implied promises.

Example of contract of indemnity: A and B went into a shop. B Said to the

shopkeeper “Let A have the goods, I will see you paid”. [Goulston Discount Co.Ltd vs. Clark]

Contact of guarantee:

S.126 A contract of guarantee is a “Contract to perform the promise, or

discharge the liability, of a third person in case of his default”.

The person who gives the guarantee: surety

The person to whom guarantee is given: creditor

The person in whose fault guarantee is given: Principal debtor

Essential features:

1. Concurrence: A contract of guarantee requires the concurrence

of all the three parties to it, principal debtor, the creditors and the

surety. A person cannot become a surety without the consent of

the principal debtor.

2. Primary labiality: The primary liability in a contact of guarantee is

that of principal debtor. The liability of surety is secondary.


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3. Essentials elements of a valid contract: All the essential

elements of valid contract are there. Consideration of surety is

“anything done, or promise made for the benefit of the principal

debtor” S.127. It must not result necessarily some benefit for him.

4. It may be oral or written or implied: Example: S and P go into a

shop. S says to the shopkeeper C, “Let P have the goods and if

he does not pay, I will pay”. [Birkmyr vs. Darnell]

Difference between contact of indemnity and contract of Guarantee.

CONTACT OF INDEMNITY CONTACT OF GUARANTEE

1. S.124 & S.125 of Indian

Contact Act, 1872

explained the provisions

of contact of indemnity.

2. It is an agreement

between two parties i.e.,

indemnifier or

indemnified.

3. Only one contact is

involved.

4. The liability of the

indemnifier is primary

and independent. It is an

original obligation.

5. The debt in indemnity is

anticipatory. The liability

of indemnifier arises only

on the happening of a

1. S.126 to 147 explains the

provision of contact of

guarantee.

2. It is a tripartite agreement

(between three parties)

i.e., the creditor, the

debtor and the surety.

3. There are three contacts.

4. The liability of the surety

is collateral and

secondary. The

obligation of surety arises

only after the default of

principal debtor.

5. The debt is an existing

one.

6. A surety on discharging


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contingency.

6. The indemnifier cannot

sue the third party in his

own name because there

are no privities of

contact.

7. Under Indian Contact

Act, the contact of

indemnity is only an

expressed contact.

the debt due by the

principal debtor, steps

into the shoes of the

creditor. He can proceed

against the Principal

debtor in his own name

7. It is both expressed and

implied.


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CHAPTER-VIII

BAILMENT AND PLEDGE (SECTION 148 TO 181)

Contract of bailment and pledge are a special class of contracts.

However they do not deal with all types of bailment. There are separate acts,

e.g., The Carrier’s Act, 1865, The Railway Act, 1890, The Carriage of Goods

by Sea Act, 1925, which deals with special types of bailment.

Bailment:

The word ‘Bailment’ is derived form the French word “Baillier’means

delivers .Etymologically it means any kind of ‘handing over’.

In legal sense, it involves change of possession of goods from one

person to another for some specific purpose.

Definition

S.148 defines “Bailment” as the delivery of goods from one person to

another for some purpose, upon a contract, that they shall, when the purpose

is accomplished, be returned on otherwise disposed off according to the

direction of the person delivering them.

The person delivering the goods- bailor

The person to whom it is delivered-bailee

Example: A delivers a piece of cloth to B, a tailor, to be stitched into suit.

There is a contract of bailment Between A and B.

Requisites of bailment:

1. Contract: A bailment is usually created by agreement between

the bailor and bailee. The agreement may be expressed or

implied

Bailment is implied n case of finder of goods and the owner even

without contact.


24

2. Bailment is concerned only with goods: goods here mean

every kind of movable property other than actionable claim and

money [S.2 (7) Sales of Goods Act].

3. Delivery of possession: A Bailment necessarily involves delivery

of possession of goods by bailor to bailee. The basic features of

possession are control and an intention to exclude others. It is not

the mere custody of goods.

Delivery of possession may be actual or constructive.

Actual delivery: May be made physically handing over the goods

to the Bailee. Constructive delivery: the possession is transferred

without actually handing over the goods.

4. For some purpose: The delivery of goods from bailor to bailee is

for some purpose.

5. Return of specific goods: It is agreed between the bailor and the

baiilee that as soon the purpose is achieved, the goods shall be

returned or disposal of according to the directions of the bailor. If

the goods are not to be specifically returned, there is no bailment.

But there is a bailment even if the good bailed are, in the

meantime, attended in form e.g., when a peace of cloth it stitch

into a suit.

Types of bailment or classification of bailment:

Bailment may be classified according to the benefit derived by the parties:

1. For exclusive benefit of the bailor: the delivery of some valuables to

a neighbor for safe custody without any charge.

2. For the exclusive benefit of the bailee- As the lending of the bicycle

to a friend for use, without any charge.

3. For the mutual benefit of the bailor and bailee – Giving a watch for

repair, a suit for stitch and acceptance of article by post office as a

value payable parcel.

Bailment may be classified into: Gratuitous bailment: It is a bailment where no consideration passes

between the bailee and bailor bicycle


25

Example: A lending of bicycle to your friend without any charges.

Non-gratuitous bailment: It is a bailment where consideration posses

between bailor and bailee.

Example: A hiring of bicycle .

DUTIES AND RIGHTS OF BAILOR

Duties of bailor 1. To disclose known faults: It is the first and foremost duty of the bailor

is to disclose the known faults about the goods to the bailee. If he

does not make such disclosure, he is responsible for any damage

caused to the bailee directly any from such faults (S.150). I. In gratuitous bailment the bailor is responsible only for those

faults which are known to him.

Example: A lends a horse to B, which he knows to be vicious and

does not disclose it. The horse rungs away and B is thrown and

injured. A is responsible to B for damage sustained.

II. In non gratuitous bailment, the bailor is responsible for the

damage caused by both the known at unknown faults.

Example: A hires a carriage of B the carriage is unsafe, though B

is not aware of this and A is injured. B is responsible for the

damage. (Read vs. Dean).

2. To bear the extraordinary expenses of bailment: The bailee is

bound to bear the ordinary and reasonable expenses of the bailment.

But for any extra ordinary expenses the bailor is responsible.

Example: A lends his horse to B, a friend for 2 days. The feeding

charge is to be paid by B. But if the horse gets sick, A will bear the

medical expenses.

3. To indemnify the bailee for loss in case of premature termination of contract: A gratuitous bailment can be terminated by the bailor at

any time even though the bailment is for a specified time or purpose.

But in such case the loss occurring to the bailee from such premature

termination should not exceed the benefit he has derived out of the


26

bailment. If the loss exceeds the benefit he has derived out of the

bailment the bailor shall have to indemnify the bailee.

4. To receive back the goods: It is the duty of the bailor to receive back

the goods from the bailee when the bailee returns them after the expiry

of the term of the bailment or the purpose of the bailment is achieved. 5. To indemnify the bailee: Where the title of the bailor to the goods is

defective and the bailee suffers as a consequence, the bailor is

responsible to the bailee for any loss which the bailee may sustain.

Rights of the bailor

1. Enforcement of the rights: The bailor can enforce by suit all the

liabilities or duties of the bailee as his rights.

2. Avoidance of contract: The bailor can terminate the bailment if the

bailee does with regard to the goods bailed, any act which is consistent

with the terms of the bailment.

Example: A lets a horse to B for his own riding only. B uses the horse

with a carriage. A can terminate the bailment.

3. Return of goods lent gratuitously: When the goods are lent

gratuitously, the bailor can demand there return whenever he pleases

even though he lend them for a specified time or purpose.

4. Compensation for wrong doers: If a third person wrongfully deprives

the bailee of the use or possession of the goods bailed or does them

any injury the bailor or bailee may bring a suit against the third person

for such deprivation or injury. (S.180)

Duties of the Bailee 1. To take reasonable care of the goods bailed: In all cases of the

bailment the bailee is bound to take as much care of the goods bailed

to him as man of ordinary prudence would under similar circumstance

take of his own goods U/S.151.

Example: M was admitted to a hospital where her jewellery was

handed over to the hospital official for the safe custody. The jewellery

was stolen, held the hospital officials were the bailee’s and was liable

for the loss. (Martin v. London County council)


27

2. Not to make an unauthorized use of goods: If the bailee uses the

goods in a manner which is inconsistent with the terms of the contract,

he shall be liable for any loss even though he is not guilty of negligence

even if the damage is the result of an accident.

Example: A lends a horse to B for riding only, B allows C a member of

his family to ride the horse. C rides with care, but horse accidentally

falls and is injured. B is liable to make the compensation to A for the

injury caused to horse.

3. Not to mix with the goods bailed with his own goods: The bailee

must not mix with the goods of the bailor with his own goods, but must

keep them separate from his own goods.

4. Not to set up an adverse title: The bailee must hold the goods on

behalf of and for the bailor. He cannot denied the right of the bailor to

bail the goods and receive them back if he delivers the goods bailed to

a person other than the bailor, he may prove that the such person had

a right against the bailor.

5. To return any accretion to the goods: In the absence of the contract

to the contract the bailee is bound to deliver to the bailor, or according

to his direction, any increase or profit which may have accrued from the

goods bailed (S.163).

Example: A leaves a cow at the custody of the B to be taken care of.

The Caw has a calf. B is bound to deliver the calf along with caw.

6. To return the goods: It is the duty of the bailee to return or deliver the

goods according to the bailor’s directions as soon as the time for which

they were bailed has expired or the purpose is accomplished (S.160).

Rights of the Bailee

1. Enforcement of the rights: The duties of the bailor is the right of the

bailee as such the bailee can by suit enforce the duties of the bailor.

2. Delivery of the goods to one of several joint bailor of the goods: If

several joint owners of the goods bailed them the bailee may delivered

them to back or to according to the direction, one joint owner without

the consent of all. In the absence of any agreement to the contrary

(S.165)


28

3. Delivery of the goods to the bailor without title: If the bailor has no

title to the goods, and the bailee in good faith, delivers them back to the

bailor, the bailee is not responsible to the owner in respect of such

delivery.(S.166)

4. Right to apply to the court to stop delivery: If a person, other than

the bailor claims goods bailed, the bailee may apply to the court to stop

delivery and to decide the title to the goods. (S.167)

5. Right of action against the trespasser: If a third person wrongfully

deprives the bailee use or the possession of the goods bailed, he has

the right to bring an action against that party (S.180)

6. Bailee’s lien: Where the lawful charges of the bailee in respect of the

goods bailed are not paid, he may retain the goods. This right of the

bailee to retain goods is known as particular lien.

PLEDGE

A pledge is the bailment for security. It is a special kind of contract.

Definition:

According to S.172 bailment of goods as security for payment of debt

or performance of promise is called pledge. The bailor is called ‘The Pledger

or Pawner’ and the bailee is called ‘The Pawnee’ or pledgee.

Example: A borrows Rs.200/- from B and keeps his watch as security for

payment of the debt. The bailment of watch is a pledge.

Any kind of movable property i.e., goods, documents or valuables may

be pledge. Even a saving bank passbook may be pledged. [J & K Bank vs.

Tek Chand]

The delivery of goods may be

Actual delivery

Constructive delivery


29

Difference between Bailment and Pledge

PLEDGE BAILMENT

I. Pledge is the bailment of

the goods as a security

for the performance of

the specific promise, i.e.,

the payment of debt or

performance of a

promise.

II. In the default by the

pawner to repay the

debt, the Pawnee may

after giving notice to the

pawnor sell the goods

pledged with him.

III. In case of pledge the

pawnee has no right to

use the goods pledge

with him.

I. Bailment on the other

hand is for the purpose of

any kind.

II. The Bailee may either

retain the goods or sue

for his charges.

III. In case of bailment, the

bailee may do so if the

terms of the bailment so

provide.

Right of the Pawnee:

1. Right of retainer: The Pawnee may retain the goods pledged until

his dues are paid. He may retain tem not only for the payment of

the debt or performance of the promise. For (a) the interest due on

the debt, and (b) all necessary expenses incurred by him in respect

of the possession or for the preservation of the goods pledged

.A173. He can however exercise only a particular lien over the

goods.


30

2. Right of retainer for subsequent advances: When the Pawnee

lends money to the same pawnor after the date of the pledge, it is

presumed that the right of retainer over the pledged goods extends

to subsequent advances also .this presumption can be rebutted

only by a contract to the contrary.A174. 3. Right of extraordinary expenses: The Pawnee is entitled to

receive from the Pawnor extraordinary expenses incurred by him for

the preservation of the goods pledged A175. For such expenses, he

has no right to retain the goods, he can recover by suit.

4. Right against true owner, when the Pawner‘s title is defective:

When the Pawnor has obtained possession of the goods pledged

by him under a void able contract (i.e., by fraud, undue influence,

coercion, etc.) but the contact has not been rescinded at the time of

the pledge, the pawnee acquires a goods title to the goods,

provided he act in goods faith and without notice of the pawnor’s

defect of title (S.178A).

5. Pawnee’s rights where pawnor makes default (S.176): Where

the pawnor fails to redeem his pledge, the pawnee can exercise the

following rights:

He may file a suit against the pawnor upon the debt or promise

and may retain the goods pledged as a collateral security.

He may sell the goods pledged after giving the pawnor a

reasonable notice of the sale. Of these two rights, while the

right to retain or sell the pawned goods are not concurrent, the

right to sue and sell are concurrent right, i.e., he pawnee may

sue and at the same time retain the goods as concurrent

security or sell them after giving reasonable notice of the sale

to the pawnor [Haridas Mundra v. National & Grindlays Bank Ltd.]

He can recover from the pawnor any deficiency arising on the

sale of the goods by him. But he shall have to hand over the

surplus, if any realized on the sale of the goods to the pawnor.


31

Right of Pawner 1. Right to get back goods: on the performance of promise or

repayment of loan and interest, if any, the pawnor is entitled to get

back the goods pledged.

2. Right to redeem debt: Quite often a time is stipulated for the payment

of the debt, or performance of the promise, for which the pledge

payment of the debt, or performance of the promise, for which the

pledge is made. In such a case if the pawnor makes default in

payment of the debt or performance of the promise at the stipulated

time, he may still redeem the goods pledged at any subsequent time

before the actual sale of them; but he must, in that case, pay, in

addition, any expenses which have arisen form his default (S.177).

3. Preservation and maintenance of the goods: The pawnor has a

right to see that the Pawnee, like bailee, preserves the goods pledged

and property maintains them.

4. Right of an ordinary debtor: The pawnor has in addition to the above

rights, the rights of an ordinary debtor which are conferred on him by

various statutes mean for the protection of debtors.


32

CHAPTER-IX

CONTRACT OF AGENCY

Introduction:

The complexities of modern business are such that it is not public for

any man to transact all his business by himself. He cannot personally attend

to all in which it is necessary for him to be brought into legal relations with

other people of necessity. He has to depend on the services of other persons

in order run his day to day business affairs. Such other persons are called

agents.

Definition:

According to S.182 an agent is a person employed to do any act for

another, or to represent another in dealing with third person. The person for

whom such act is done or who is represented is called principal.

The function of an agent is to bring his principal into a contractual

relation with a third person this means that an agent is merely a connecting

link between the principal and third parties.

Essential of agency: 1. Agreement between the principle and the agent: Agency

depends on the but not necessarily on the contact. Again, no

consideration is necessary to create an agency S.185.

2. Intention of the agent to act on behalf of the principle: Whether

a person does intend to act on behalf of another is a question of

fact.

Rule of agency

1. Whatever a person can do personally he can do through an agent.

Exceptions: (i) The acts to be perform in personal in nature or (ii) if it

annexed to public office.

2. He, who does an act through another, does it by himself: This in

other wards many that the acts of an agent subject to certain

conditions are act of the principal it has the same legal

consequence as if it has been done by the principal.


33

Who can employ an agent?

Any person who is of age of majority according to the law to which he

is subject is of sound mind, not lunatic or drunken may employ an

agent.(S.183)

Who may be an agent?

Any person who is authorized to act as such may be an agent. He may

not have the capacity to contract but no person who is of minor and of

unsound mind is responsible to his principal. (S.184). It is therefore in the

interest of the principal that the agent should have contractual capacity. Duties of agent

1. To carry out the work undertaken according to the direction given by the principal: If any direction is not provided he may act according

to the prevalent customs in doing the business of same kind. If he acts

otherwise he is liable for the loss incurred.

2. To carry out the work with reasonable care skill and diligence: an

agent is bound to conduct the business of the agency with as much

skill as us generally possessed by person engaged in similar business.

He is liable to the principal in respect of the direct consequence of his

neglect, want of skill and misconduct.

3. To render proper account proper accounts to the principal U/S. 213.

4. Communicate with the principal in case of difficulty: in difficult

situation the agent must use all reasonable diligence in communicating

with the principal to obtain instruction S.214.

5. Not to deal his on his own account: The agent must not deal on his

own account in the business of agency without the consent of the

principal. If he does so the principal has the option to repudiate the

transaction or claim from the agent any benefit which may have

resulted to him from the transaction.


34

6. to pay sums received for the principal: An agent is bound to pay to

the principal all sums received on his account after deducting the

expense incurred, advances made at money due to him.

7. To protect and preserve the interests of the principal in case of his death or insolvency: When an agency is terminated by the

principal dying or becoming of unsound mind, the agent is bound to

take unsound mind, the agent is bound to take reasonable care on

behalf of the representative of his late principal.

8. Not to use information obtained in course of the agency against the principal: It is the duty of the agent to pass on any information

which eh receives in the curse of agency to principal. If he uses any

information against the interest of the principal, he is bound to

compensate the loss.

9. Not to make secret profit from agency: An agent occupies fiduciary

position i.e., the position of trust and confidence. He must not make

any profit beyond the agreed commission or remuneration without the

principal’s knowledge.

10. Not to set up adverse title: The agent must not setup his own title or

title of the third person to the goods or property he receives from the

principal as agent.

11. Not to put himself in a position where personal interest and duty conflict: In such cases he must make full disclosure of his interest to

his principal.

12. Not to delegate authority: An agent must not as a general rule,

depute another person to do what he has himself undertaken to do.


35

CHAPTER-X

SALES OF GOODS ACT.1930

Contract of sales: A contact of sales of goods is a contact whereby the

seller transfers or agrees to transfer the property in goods to the buyer for a

price S.4 (1). It includes both sale and agreement to sell.

Essential of contract of sales:

1. Two parties: There must be two distinct parties, i.e., a buyer and seller

to effect the contract of sale and must be competent to contract.

Buyer: Person who buys or agrees to buy goods [S.2 (1)]

Seller: Person who sells or agrees to sell goods [S.2 (13)]

2. Goods: It is the subject matter of the contract. Here goods mean

every kind of movable property other then ‘actionable claim’ and

‘money’. It includes stocks and shares, growing crops, grass and

things attached to or forcing part of the land which are agreed to be

several before sale. Trade work, copy rights, patent right, goodwill,

electricity, water, gas ae all goods.

3. Price: The consideration for the contract of sale is always in terms of

money. It can be partly money and partly goods.

4. Transfer of general property: There must be a transfer of general

property in goods from seller to buyer.

5. All the essential element of the valid contract:


36

Difference between sales and agreement to sell:

SALES AGREEMENT TO SELL

1. Transfer of property

a. Property in the goods

posses from the

seller to the buyer

immediately.

b. So seller is no more

the owner.

2. Types of contracts: Executed

contract.

3. Risk of loss: If the goods are

destroyed, the loss falls on the

buyer, even if the goods are in

posses on of the seller.

4. Consequences of breach: If

the buyers breach the contract,

the seller as sue him for the

price of the goods, if unpaid.

5. Right to resale: The seller

cannot resell the goods. The

subsequent buyer does not

acquire titles to the goods.

6. Right created: Jus in rem-

gives right to the buyer to

1. Transfer of property

a. Transfer of property

is the goods is to

take place at future

time or subject to

certain condition.

b. The seller is the

owner.

2. Types of contracts:

Executory contact.

3. Risk of loss: Loss falls on the

seller even if goods are in

possession at the buyer.

4. Consequences of breach:

The seller can only sue for

damages and not for the price.

5. Right to resale: Subsequent

buyer by a good title. Original

buyer can only the for

damages.


37

enjoy the goods as against the

world at large is including the

seller.

7. Insolvency of buyer: It is the

property of the buyer. So it the

buyer becomes insolvent

before he pays for the goods,

the seller must return them to

the official assignee.

6. Right created: Jus in

personam gives right to the

buyer only against the seller

form damages.

7. Insolvency of buyer: The

seller is not bound to give to

the goods to the official

assignee.


38

CHAPTER-XI

CONDITIONS AND WARRANTIES Introduction:

Every contact of sale contains many stipulations and specification

regarding the nature and quality of goods. But each of these stipulations is

not of equal importance. They differ in their character, nature and importance.

But they influence the buyer and the buyer clinches into the bargain.

Conditions [S.12 (2)]

A condition is a stipulation which is essential to the main purpose of the

contact. It is defined as an “obligation which goes so directly to the substance

of the contact, or in other words, is so essential to its very nature, that it non-

performance may fairly concealed by the other party as a substantial failure to

perform the contact of all”. If there is a breach of a condition, the aggrieved

party can treat the contact as repudiated. [Wallis vs. Pratt]

Warranty [S.12 (2)]

A warranty is a stipulation which is collateral to the main purpose of

the contract. It is not of such vital importance as a condition is. It is defined

as an” obligation which though it must be performed, is not so vital that a

failure to perform it goes to the substance of the contact”. If there is a breach

of warranty, the aggrieved party can only claim’ damages and it has no right

to treat the contact as repudiated. [Wallis vs. Pratt]

Example:

A ordered a dress to B for wedding purpose.

Colour and date of despatch – condition.

Mode of despatch-warranty


39

Distinction between condition and warranty

CONDITION WARRANTY

I. S.12 (2) of Sales of goods

Act deals with the condition.

II. Stipulation which is essential

to the main purpose of the

contact.

III. It is an obligation which goes,

so directly to the substance

of the contract that its non

performance may fairly be

considered as a substantial

failure to perform the contract

at all.

Breach of condition:

I. The aggrieved party may

repudiate the contract or

reject the goods

II. Claim compensation, or

benefit of restoration.

I. S.12 (3) of sales of goods Act

deals with the warranty.

II. Stipulation which is collateral to

the main purpose of the contact.

III. It is not so vital that its non-

performance is counted as

failure of the contact.

Breach of warranty:

I. No option to reject the goods.

II. Only claim the damages

When condition to be treated as warranty S13

1. Voluntary waiver of conditions: Where a contract of sale id subject

to any condition to be fulfilled by the seller ,the buyer may (a) waiver

the condition, or (b) Elect to treat the breach of the condition as a


40

breach of warranty S13(1). If the buyer once decides to waive the

condition, he cannot afterwards insists on its fulfillment S.13 (1).

2. Acceptance of goods by buyer: Where a contract of sale is not

severable and the buyer has accepted the goods or part thereof, the

breach of any condition by the seller can only be treated as breach of

warranty [S.13 (2)].

Implied conditions S (14-17):

In the contract of sale of goods conditions and warranties may be

express or implied. Express conditions are those which are provided by the

parties .implied conditions are those which the law implies into the contract.

1) Condition as to the title S.14 (3): There is an implied condition on the

part of the seller that: In case of sale, he has the right to sell the goods

and (b) in the case of agreement to sell, he will have a right to sell the

goods.

So, the seller must be the owner or authorized agent to sell the goods.

Example: R brought a car from D and used it for four months. The car

was a stolen one and R had to hand over to the true owner .held, R

could recover the price paid. [Rowland v Divall]

2) Sale by description [S.15]: Where there is a contract for sale of goods

by description, the goods shall correspond with description .the rule of

law “if you contract to sell peas, you cannot oblige a party to take

beans”.

Sale of goods by description includes the following situations:

I. Where the buyer has not seen the goods and relies upon the

description given by the seller. (Varley v Whipp)

II. Where the buyer has seen the goods but he relies not on what

he has seen but what was described. If there is any deviation

of the goods from the description. he can reject the goods .


41

III. Packing clause and shipment clause may sometime form the

part of the description.

3) Sale by description as well as samples S15:

Where goods are described along with samples, the goods must

correspond both with the samples as well as description. e.g., in a

contract for the sale of a quantity of seed described as “Common

English Sainfoin” the seed supplied was of different kind that can be

discoverable only by sowing so the buyer was entitled to recover

damages for the breach of condition. [Wallis v. Pratt]

4) Condition as to quality or fitness 16(1):

I. Where the buyer, expressly or by implication, makes known to

the seller the particular purpose for which he needs the goods

and depends upon the skill and judgment of the seller there is

an implied condition that the goods shall be reasonably fit for

that purpose.

Example – an order was placed for sons Lorries to be used “for

heavy traffic in a hilly area” the Lorries supplied were unfit and

broken down. There is a breach of condition as to fitness.

II. When the buyer purchases an article under its patent or trade

name ,he generally does not rely on the seller’s skill and

judgment . so the implied condition as to quality or fitness does

not apply.

III. In case the goods can be used for a number of purpose s, the

buyer must tell the seller the particular purpose for which he

requires the goods .. if he does not , he cannot hold the seller

liable if the goods do not suit the particular purpose for which he

buys the goods.

5) Conditions as to merchantability S.16 (2)


42

Where the goods are brought by description, from a seller who deals in

goods of that description. There is an implied condition that the goods

shall be of a merchantable quality. Goods are of merchantable quality

if:

i. They are commercially saleable under description by which

they are known in the market.

ii. They must be reasonably fit for the purpose for which they

are generally used. [Godley v. Penny]

6) Condition as to wholesomeness: In case of eatables in addition to

the condition of merchantability there is an added obligation that the

goods shall be wholesome.

Example: A grosser sold tinned oil which was infected. It resulted into

death of many persons. Held, the grocer was liable for breach of

condition. [Jackson vs. Watson & Sons]

7) Condition implied by custom or usage of trade [S.16 (3)]: some

goods are there, the purpose for which it is purchased is implied in the

thing itself. In such a case the buyer need not tell the seller the

purpose of the goods because there is only one customary purpose of

the goods. In breach of this condition, the seller is liable.

Example: G purchased woolen underwear from M, a retailer. After

wearing the underwear, G developed an acute skin disease held, the

goods were not fit for their only proper use and G is entitled to claim

damages. [Grant vs. Australian knitting Mill Ltd.]

RULE OF CAVEAT EMPTOR

This means “Buyer bewares”. In a contract of sale the seller has no

duty to speak the truth about the goods sold to buyer. Therefore, when a

person buys some goods, he must examine them thoroughly. If the goods

turnout to be defective or do not suit his purpose or if he depends on his own


43

skill and judgment and makes a selection he cannot blame anybody other

than himself.

Example: A lady buys synthetic pearls for high price thinking that they are

natural pearls. The seller did not correct his mistakes. The lady cannot eject

the goods and claim for the price.

Exception to the Caveat emptor. Or how the rule of caveat emptor is modified by implied condition.

The circumstances are the implied conditions.

1. Condition as to quality or fitness [S.16(1)]: Where the buyer,

expressly or by implication makes known to the seller the

particular purpose for which he requires the goods and relies on

the seller’s skill or judgment the seller must supply the goods

which shall be fit for buyer purpose.

2. Condition as to merchantability quality [S.16 (2)]: The Goods

must be if merchantable quality. This means the goods should

be commercially saleable. Thus a watch that will not keep time

or a pen that will not write is not of merchantable quality.

3. Usage of trade [S.16 (3)]: An implied warranty or condition as

to quality or fitness for a particular purpose may be assessed by

usage of trade.

4. Consent by fraud: Where the consent of the buyer, in a

contract of sale is obtained by the seller by fraud or where the

seller knowingly cancels the defect which could not be

discovered on a reasonable examination (i.e., where there is

latent defect on the goods), the doctrine of caveat emptor does

not apply.

Documents

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