Law & Life

Essentials of a Valid Promissory Note, Bill of Exchange, and Cheque (Under Negotiable Instruments Act, 1881) Introduction In day-to-day business, people often use documents like Promissory Notes , Bills of Exchange , and Cheques to settle their payments instead of using physical cash. These documents are called Negotiable Instruments and are governed by the Negotiable Instruments Act, 1881 . This assignment explains: Essentials of a Promissory Note Essentials of a Bill of Exchange Essentials of a Cheque Essential elements of a Cheque Types of Cheques Part 1: Essentials of a Valid Promissory Note Definition of Promissory Note As per Section 4 of the Negotiable Instruments Act: "A promissory note is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument." In s...

Definition of Partnership and the Relationship Between Partners Under the Indian Partnership Act, 1932 Introduction The Indian economy depends heavily on businesses of all sizes. Among the most common forms of business organizations is the Partnership Firm . The Indian Partnership Act, 1932, governs the formation, operation, and dissolution of partnerships in India. It provides detailed rules about how partners should relate to each other and run the business. In this assignment, we will discuss: Meaning and definition of partnership Essential elements of a partnership Relationship between partners (Inter Se relationships) Part 1: Definition of Partnership Meaning of Partnership A partnership is an arrangement between two or more persons who agree to share the profits of a business carried on by all or any of them acting for all. The partnership firm is not a separate legal entity like a company. It is just a collective name for the individuals (partners) who h...

Unpaid Seller and His Rights Under the Sale of Goods Act, 1930 Introduction The Sale of Goods Act, 1930 governs the sale and purchase of goods in India. It lays down the rights and duties of buyers and sellers. Among the important concepts under this Act is the “Unpaid Seller” . The law provides specific rights and remedies to the unpaid seller to protect his interest if the buyer fails to pay the price. In this assignment, we will study: Meaning of "Unpaid Seller" When a seller is considered "unpaid" Rights of an unpaid seller: Against the goods Against the buyer personally Part 1: Who is an Unpaid Seller? Definition under Section 45(1) of the Sale of Goods Act, 1930 A seller is called an Unpaid Seller when: The whole price has not been paid or tendered; OR A bill of exchange or other negotiable instrument was given as conditional payment, but the buyer has dishonored it. Thus, even if a small part of the price remains unp...

Rights and Duties of an Agent Towards the Principal and Termination of Contract of Agency Introduction In a contract of agency, an agent is appointed by the principal to act on his behalf and bring him into legal relationships with third parties. The relationship between the agent and principal is based on trust, good faith, and legal responsibility . The Indian Contract Act, 1872, especially Sections 182 to 238, deals with agency law. In this assignment, we will discuss: The Rights of an Agent The Duties of an Agent The ways in which the Agency can be terminated Part 1: Rights of an Agent Towards the Principal An agent is entitled to certain rights while performing his duties. These rights are given by law to ensure the agent can perform his job properly and fairly. The major rights of an agent are: 1. Right to Remuneration Explanation : An agent has the right to receive the agreed remuneration or commission for the services rendered. Important Points...

Methods of Creation of Agency Introduction An agency is a relationship between two parties, where one party (the agent ) is authorized to act on behalf of the other party (the principal ) to create a legal relationship with a third party. The Indian Contract Act, 1872 governs the law of agency in India. There are various ways through which an agency can be created. Some agencies are formed by express agreement, while others may arise automatically due to actions, circumstances, or by law. Methods of Creation of Agency The different methods by which an agency can be created are: 1. Agency by Express Agreement Meaning : When the principal appoints an agent by clear words , either spoken (oral) or written , it is called agency by express agreement. Example : A person signs a power of attorney to authorize another person to act on their behalf. Orally telling someone, "You can sell my bike on my behalf," is also express agency. Legal Basis : Section 1...

Agency by Ratification Introduction Agency refers to a relationship where one person (the agent ) is authorized to act on behalf of another person (the principal ) to create legal obligations. An agency by ratification occurs when a person acts on behalf of another without prior authorization, but the principal later approves (or "ratifies") the actions taken by the agent. This approval makes the act legally binding as if it was initially authorized. Definition of Agency by Ratification Under Section 196 of the Indian Contract Act, 1872 , agency by ratification is defined as the situation where: "An act done on behalf of a person, who is not previously authorized to do so, can be considered as an act of agency when the principal, by subsequent approval (ratification), accepts the act and makes it binding." In simple terms: The agent acts without authority . The principal ratifies the action , making it valid as if it was originally authorized. ...

Pledge Under the Indian Contract Act, 1872 Introduction A pledge is a specific type of bailment where goods are delivered as security for the payment of a debt or the performance of a promise. The term "pledge" is defined under Section 172 of the Indian Contract Act, 1872 . "A pledge is the bailment of goods as security for payment of a debt or the performance of a promise." Parties in a Pledge Pawnor : The person who delivers the goods to the other party as security for a loan or debt. Pawnee : The person who receives the goods from the pawnor as security and has a right to retain them until the debt or promise is fulfilled. Key Features of a Pledge Delivery of Goods : The pawnor must deliver the goods to the pawnee . The goods serve as security until the debt is repaid or the promise is fulfilled. Purpose : The primary purpose of a pledge is to secure the payment of a debt or the performance of an obligation . Possession with th...

Who is Called a Bailor? Meaning of Bailor A bailor is the person who delivers goods to another person (called the bailee ) under a contract of bailment . The bailor gives the goods for a specific purpose, with the condition that the goods will be returned once the purpose is completed or will be disposed of according to the bailor’s instructions. In simple words: "The one who gives the goods temporarily to another person for safekeeping, repair, transport, or any other purpose is called the bailor." The definition of bailor is given under Section 148 of the Indian Contract Act, 1872 . Examples of Bailor If you give your mobile phone to a service center for repair, you are the bailor . If you hand over your luggage at a railway cloakroom, you are the bailor . If you give your car to a valet at a hotel for parking, you are acting as a bailor . Essential Features of a Bailor Ownership or Possession : The bailor must have either ownership or lawful ...

Difference Between Bailment and Pledge Introduction Both bailment and pledge are types of special contracts under the Indian Contract Act, 1872 . Both involve the delivery of goods from one person to another for a specific purpose. However, there are some important differences between bailment and pledge based on the purpose, rights, and duties of the parties. In this assignment, we will understand both concepts separately and then explain their differences. Meaning of Bailment According to Section 148 of the Indian Contract Act, 1872: "A bailment is the delivery of goods by one person to another for some purpose, upon a contract that the goods shall be returned once the purpose is accomplished or otherwise disposed of according to the instructions of the person delivering them." Parties to Bailment: Bailor : The person who delivers the goods. Bailee : The person who receives the goods. Example of Bailment: Giving your clothes to a dry cleaner is ...

Who is a Surety in a Contract of Guarantee? Introduction Contracts of guarantee are very important in the business and banking world. When a creditor is giving money or goods to a debtor, they often want extra assurance that they will get their money back. This is where the surety comes into the picture. The surety provides a promise that if the principal debtor does not pay, the surety will. In simple words: A surety is a person who gives a guarantee to the creditor on behalf of the principal debtor. Thus, a surety plays a major role in building trust between the creditor and the debtor. Definition of Surety According to Section 126 of the Indian Contract Act, 1872 : "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 is called the surety." Thus: The surety promises the creditor that he will fulfill the debtor’s obligation if the debtor fails....

Essentials of a Contract of Guarantee Introduction In business and daily transactions, sometimes a person may need support to borrow money or complete obligations. In such situations, another person may step in and promise the creditor that they will pay if the debtor fails. This special kind of promise is called a Contract of Guarantee . A Contract of Guarantee provides security to the creditor and trust to the transaction. It is an important part of the Indian Contract Act, 1872, covered under Section 126 . Definition According to Section 126 of the Indian Contract Act, 1872 : "A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default." In simple words, it means that one person (surety) promises to take responsibility if another person (principal debtor) fails to fulfill their obligation. Parties to a Contract of Guarantee There are three main parties involved: Principal Debtor Th...

Contract of Indemnity Introduction In daily life and business activities, risks and losses are common. To manage these risks, people often enter into agreements where one promises to protect the other from potential losses. In law, such an agreement is called a Contract of Indemnity . It plays an important role in building trust between individuals, businesses, and institutions. This concept is especially important in sectors like insurance, agency work, and business contracts. The Contract of Indemnity is governed under the Indian Contract Act, 1872 , specifically under Section 124 . Definition According to Section 124 of the Indian Contract Act, 1872 : "A contract of indemnity is a contract by which one party promises to save the other from any loss caused to him by the conduct of the promisor himself or by the conduct of any other person." In simple words, a contract of indemnity means one person promising to compensate another person for the losses suffered ...