Contracts-II

[Audio] Contracts-II – 15 Marks Questions Question: Explain implied conditions and warranties under sale of goods contract? Answer: Under the Sale of Goods Act, 1930, implied conditions and warranties are terms that are not explicitly stated in the contract but are assumed to be included by law to ensure fairness and protect the interests of the buyer. Here's a breakdown of these concepts: Implied Conditions Implied conditions are fundamental terms that go to the root of the contract. If breached, the buyer can repudiate the contract. Key implied conditions include: Condition as to Title: The seller has the right to sell the goods, and the buyer will enjoy quiet possession of the goods. Condition as to Description: Goods sold by description must correspond with the description. Condition as to Quality or Fitness: If the buyer makes known the particular purpose for which the goods are required, there is an implied condition that the goods shall be reasonably fit for that purpose. Condition as to Merchantable Quality: Goods bought by description from a seller who deals in goods of that description must be of merchantable quality..

[Audio] 5. Condition as to Sample: When goods are bought by sample, the bulk must correspond with the sample in quality. Implied Warranties Implied warranties are secondary terms that do not go to the root of the contract. Breach of a warranty allows the buyer to claim damages but not to repudiate the contract. Key implied warranties include: Warranty of Quiet Possession: The buyer shall have and enjoy quiet possession of the goods. Warranty of Freedom from Encumbrances: The goods shall be free from any charge or encumbrance in favor of any third party not declared or known to the buyer before or at the time when the contract is made..

[Audio] Question: Explain the rights of unpaid seller with the help of leading cases. Answer: Under the Sale of Goods Act, 1930, an unpaid seller has several rights to protect their interests when the buyer fails to pay the price of the goods. These rights can be categorized into rights against the goods and rights against the buyer. Here's a detailed explanation along with leading cases: Rights Against the Goods Right of Lien: The unpaid seller can retain possession of the goods until payment is made. This right is lost if the seller delivers the goods to a carrier for transmission to the buyer without reserving the right of disposal. Case: Babcock & Wilcox Ltd. v. National Boiler Insurance Co. Ltd.: This case highlighted the seller's right to retain possession of the goods until full payment is received. Right of Stoppage in Transit: If the buyer becomes insolvent, the unpaid seller can stop the goods in transit and regain possession. Case: Booth Steamship Co. Ltd. v. Cargo Fleet Iron Co. Ltd.: This case established that the seller could stop the goods in transit upon the buyer's insolvency. Right of Resale: The unpaid seller can resell the goods if the buyer defaults. This right can be exercised if the goods are perishable or if the seller has given notice to the buyer of their intention to resell..

[Audio] Case: MacKenzie v. Dunlop Rubber Co. Ltd.: This case demonstrated the seller's right to resell the goods when the buyer failed to pay. Rights Against the Buyer Right to Sue for the Price: The seller can sue the buyer for the price of the goods if the property in the goods has passed to the buyer or if the price is payable on a certain day irrespective of delivery. Case: Colley v. Overseas Exporters: This case confirmed the seller's right to sue for the price when the buyer failed to pay as agreed. Right to Claim Damages: The seller can claim damages for non-acceptance if the buyer wrongfully neglects or refuses to accept and pay for the goods. Case: Hadley v. Baxendale: Although primarily a case on remoteness of damages, it is often cited in the context of claiming damages for breach of contract, including sales contracts..

[Audio] Question: What is the procedure for dissolution of firm? Answer: The dissolution of a firm involves several steps to ensure that all legal and financial obligations are properly addressed. Here's a detailed procedure for the dissolution of a partnership firm under the Indian Partnership Act, 1932: 1. Dissolution by Agreement Mutual Consent: All partners must agree to dissolve the firm. This can be based on a pre-existing agreement or a new mutual decision. Legal Documentation: Draft and sign a dissolution agreement outlining the terms and conditions of the dissolution. 2. Compulsory Dissolution Insolvency: If all partners or all but one partner become insolvent. Illegality: If the business of the firm becomes illegal due to changes in law. 3. Dissolution by Notice Partnership at Will: Any partner can dissolve the firm by giving notice to all other partners if the partnership is at will..

[Audio] 4. Dissolution by Court Court Order: A partner can apply to the court for dissolution on grounds such as: Insanity or incapacity of a partner. Misconduct affecting the business. Persistent breach of the partnership agreement. Transfer of the whole interest by a partner. Business operating at a loss. 5. Settlement of Accounts Realization of Assets: Sell the firm's assets to pay off liabilities. Payment of Liabilities: Clear all debts and obligations of the firm. Distribution of Surplus: Distribute any remaining assets among the partners according to their profit-sharing ratio. 6. Public Notice Notice to Public: Issue a public notice of the dissolution to avoid future liabilities. Notice to Registrar: Notify the Registrar of Firms about the dissolution..

[Audio] 7. Final Accounts Prepare Final Accounts: Prepare and settle the final accounts of the firm. Distribution of Remaining Assets: Distribute any remaining assets among the partners. Leading Case: Garner v. Murray This case established the principle that, in the absence of an agreement to the contrary, losses (including capital losses) should be borne by the partners in the same proportion as they share profits..

[Audio] Question: Write on the kinds of endorsements of a negotiable instrument Answer: Endorsements of negotiable instruments are crucial for transferring ownership and ensuring the instrument's enforceability. Here are the main types of endorsements: 1. Blank or General Endorsement Definition: The endorser signs their name only, without specifying a payee. This makes the instrument payable to the bearer. Example: If a cheque is payable to "John Doe" and he signs only his name on the back, it becomes a bearer instrument. 2. Special or Full Endorsement Definition: The endorser signs their name and specifies a particular person to whom the instrument is payable. Example: "Pay to the order of Jane Smith," followed by the endorser's signature. 3. Restrictive Endorsement Definition: Limits the use of the instrument to a specific purpose or restricts further negotiation. Example: "Pay to Jane Smith only" or "For deposit only to account of Jane Smith.".

[Audio] 4. Partial Endorsement Definition: Transfers only a part of the amount payable on the instrument. This type of endorsement is generally not valid for negotiation. Example: Endorsing a cheque for ₹10,000 as "Pay ₹5,000 to Jane Smith." 5. Conditional or Qualified Endorsement Definition: The endorser attaches a condition to the transfer of the instrument. Example: "Pay to Jane Smith upon her graduation," followed by the endorser's signature. 6. Sans Recourse Endorsement Definition: The endorser disclaims any future liability on the instrument. Example: "Pay to Jane Smith without recourse," meaning the endorser will not be liable if the instrument is dishonored. 7. Facultative Endorsement Definition: The endorser waives some of their rights, such as the right to receive notice of dishonor. Example: "Pay to Jane Smith, notice of dishonor waived.".