B.V. Patel Institute of Business Management, Computer & Information Technology, Uka Tarsadia University

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1 TYB.Com B.V. Patel Institute of Business Management, Computer & Information Technology, Uka Tarsadia University Question Bank : Business Law Unit 1: Legality of object and consideration and void agreement Answer the following. (1 mark) 1. What is a void agreement? Any agreement having unlawful objects or considerations is a void agreement. 2. Which section of Indian Contract Act speaks of three things, namely, consideration and for the agreement? Section What is maintenance? Maintenance is an agreement whereby a person promises to maintain a suit in which he has no interest. 4. What the characters an unlawful agreement? An unlawful agreement is not enforceable by law. 5. What is meant by Ex tupri cause non oritur action? It means no action arises from a base cause. 6. What is an illegal agreement? An illegal agreement is one which is forbidden by law. 7. State any one example of illegal agreement. An agreement to commit a murder. 8. Which section of the Contract Act specifies agreements in restraint of marriage? Section Give any one exception to agreement in restraint of legal proceedings. 1. An agreement to refer all future disputes in connection with a contract to arbitration 2. An agreement to refer all present disputed with regard to a contract to arbitration 1

2 10. Mention any one Case under which consideration or object becomes unlawful. Forbidden by law Briefly answer the following. (2 marks) 1. List two circumstances under which the consideration or object of an agreement is considered unlawful? Ans. Consideration or object is unlawful under the following cases It is forbidden by law it would defeat the provisions of any law 2. Mention any two features of legality of object. Ans. 1. The object of the agreement should be legal 2. Consideration for both the parties should be legal 3. What is meant by trafficking public office? Ans. Refer to trafficking public office agreements for the sale or transfer of public offices or titles for the procurement of a public recognition. For example sale or transfer of Padma Vibhushan or Param Veer Chakra for monetary consideration are unlawful. 4. List agreements that interfere marital duties. Ans. Such agreements include: A promise by married person to marry during the lifetime or after the death of spouse An agreement in contemplation of divorce. 5. What is meant by in pari delicto, potior est condition defendants? Ans. It is a maxim which means that cases of equal guilt, the defendant is in a better position than that of a plaintiff. 6. Mention any two cases under which a contract becomes void. Ans. A contract becomes void in the following under the following cases: A contract becomes void by impossibility or illegality A voidable contract becomes void when the party whose consent is not freely repudiates the contract 7. Mention exceptions agreements in restraint of trade. 2

3 Ans. 1. Statutory exceptions 2. Judicial interpretation 8. Mention any two special cases in wagering agreements? Ans. 1. Commercial transaction 2. Lotteries 9. List any two types of void agreements declared by the Indian Contract Act. Ans. 1. Agreements by minor and unsound mined. 2.Agreements made under a mutual mistake of fact 10. Mention two essential features of a wagering agreement. Ans. 1. Uncertain event 2. Each party must stand to win or lose. 11. Differentiate between an illegal agreement and a void agreement. Ans. An illegal agreement is both unenforceable and forbidden but a void agreement is only unenforceable. Answer the following (limit 250 words). (5 marks) 1. List six circumstances which would make and object or consideration unlawful. Also Ans. explain any two of them. 1. Forbidden by law 2. Defeat of the provision of law 3. Fraudulent 4. Injurious to person or property 5. Immoral 6. Public policy Forbidden by law: Object or consideration becomes unlawful when it is forbidden by law. An agreement the consideration or object of which is unlawful is void. `Law' in this connection means the law for the time being in force in India and, therefore, includes Hindu and Mohamdan Laws and also principles of unwritten law. 3

4 An act is forbidden by law when it is punishable by the criminal, law of the country. An act is forbidden by law when it is prohibited by special legislation or regulations made by a competent authority under powers derived from the legislature. Immoral: An agreement the object or consideration of which is immoral, e.g. an agreement between a husband and wife for future separation, is unlawful. Example: A married woman was given money to enable her to obtain divorce from her husband and then marry the lender. Held, the agreement was immoral and the lender could not recover the money. 2. Write a brief essay on void agreement. Ans. An agreement not enforceable by law is said to be void section 2g. The Indian Contract Act declares certain agreement as void ab initio and not illegal. An illegal agreement is one which is forbidden by law. Thus an illegal agreement is both unenforceable and forbidden but a void agreement is only unenforceable but not illegal. Void contract is one which is valid when it is entered into, but subsequently something happens which makes it unenforceable. Examples a. A contract becomes void by impossibility or illegality. b. A voidable contract become void when the party whose consent is not freely repudiates the contract. c. A contingent contract to do or not to do something on the happening of an event become void when the event becomes impossible. 3. What is an illegal agreement? What are effects of illegality? Ans. An illegal agreement is both unenforceable and forbidden by law. It has following features Illegal agreement is unenforceable. In illegal agreements, a further effect is other transaction which is incidental or collateral. Parties to an illegal agreement cannot get any help from a court of law. The general rule is that no action is allowed on an illegal agreement. This is base on two maxims. 4

5 No action arise from a base cause. The law discourages people from entering into illegal agreement which arise from base cause. In case of equal guilt, the defendant is in a batter position than of a plaintiff. 4. Write a brief note on agreements which interfere with administration of justice. Or Mentions any five types of agreements which interfere with administration of justice. In this context explain the following. a. Interference with the course of justice: b. Agreement in restraint of parental rights c. Agreement in restraint of marriage. Ans. Agreements which interfere with administration of justice are: 1. Stifling prosecution 2. Maintenance and champerty 3. Agreements in restraint of legal proceedings of litigation 4. Trafficking public offices 5. Agreements in restraint of parental rights 6. Marriage brokerage or brokerage agreements a. Interference with the course of justice: An agreement which obstructs the ordinary process of justice is unlawful. Thus, an agreement for using improper influence of any kind with the judges or officers of justice is unlawful. But an agreement to refer present or future disputes to arbitration is valid b. Agreement in restraint of parental rights: A father, and in his absence the mother, is the legal guardian of his/her minor child. The right of guardianship cannot be bartered away by any agreements. A father is entitled by law to the custody of his legitimate child. He cannot enter into an agreement which is inconsistent with his duties arising out of such custody. c. Agreement in restraint of marriage: Every agreement in restraint of the marriage of any person other than a minor is void (Section 26). This is because the law regards marriage and married status as the right of every individual. 5

6 5. What is meant by wager agreements? Throw light on the following cases in wages. a. Commercial transaction b. Lotteries c. Crosswords puzzle. Ans. A wager is an agreement by which money is payable by one person to another on the happening or non happening of a future, uncertain event. For Example: A and B agree with each other that if it rains tomorrow, A will pay B Rs.100 and if does not rain tomorrow, B will pay Rs.100. a. Commercial transaction: Agreements for sale and purchase of any merchandise or share market transactions in which there is good intentions to have legitimate business are not wagering agreements. If there is bad intention and parties only wish to gamble on the rise or fall of the market by paying or receiving the differences in prices, the transaction would be wagering agreement and hence void. According to Pollock and Mulla, "in order to constitute a wagering contract, neither party should intend to perform the contract itself, but only pay the differences." b. Lotteries: A lottery is a game of chance and therefore the lottery business is a wagering transaction. Such a transaction is not only void but also illegal since Section 294-A of the Indian Penal Code declares "conducting of lottery" a punishable offence. If a lottery is authorized by the government, the only effect of such permission is that the persons conducting the lottery will not be guilty of a criminal offence, but remains a wager alright. c. Crosswords puzzle: Where prizes depend upon a chance, it is treated as a wagering transaction. A crossword puzzle, in which prizes depend upon correspondence of the competitor's solution with the prepared solution, is a wager. But if prizes depend upon skill and intelligence, it is a valid transaction. 6

7 Unit: 2 Performances of Contract, Distract and Breach Of Contract 1 mark Questions 1. What is meant by performance of contract? Performance of a contract means fulfilment of promises and legal obligations by the parties under the contract. 2. Who has right to perform a contract? Promisor himself Agent Legal representatives Third Person Joint promisors 3. Who can demand the performance? Only promisee 4. What is meant by tender? Tender is the offer to perform the obligation under the contract. 5. What is meant by the term to assign? To assign means to transfer 6. Under which Act a contract may be discharge by lapse of time? Limitation Act, What is meant by discharge of contract? Cancellation of contract 8. Mention various types of breach of contract. Anticipatory breach of contact Actual breach of contact 9. Give the alternative name of anticipatory breach of contract. Constructive breach of contract 10. Who has the right to discharge contract in anticipatory breach of contract? Aggrieved party 7

8 2 Marks Questions 1. What is a reciprocal promise? Promises which form the consideration or part of the consideration for each other is called reciprocal promise. 2. Mention rules for assignment of contractual obligation. Contractual obligations involving personal skill or ability cannot be assigned A promisor cannot assign his liabilities or obligations under a contact 3. Why time is of essence of the contract? If the promisor fails to perform on an agreed or specified time, the contracts will become voidable at the option of the promisee. 4. List any two types of reciprocal promise. Mutual and independent Conditional and dependent 5. Define discharge of contract. When the parties fulfill their respective obligations, their liability under the contract comes to end the contract is said to be discharged. 6. List any two implied consent for discharge by agreement. Novation Alteration 7. What is meant by rescission? Rescission is cancellation of the contract which takes when all or some of the terms of contract are cancelled. 8. Mention any two cases when contracts can be discharge by operation of law. (1) Discharge by death and (2) Discharge by insolvency 9. What is meant by breach of contract? Under the parties breach of contract the contract by refusing to perform their obligations, it is call breach of contract. 8

9 10. Define anticipatory breach of contract. When a party repudiates his obligation under the contract before the time for performance us due. 11. What is actual breach of contract? Actual breach means breach committed either (i) at the time when the performance of the contract is due, or (ii) during the performance of the contract 12. What are the consequences of anticipatory breach? The aggrieved party can take following steps Treat the contract as discharged, Resort to the legal action 5 Marks Questions 1. What is meant by performance of the contract? Who can perform the performance under contract? Performance of a contract means carrying out of promises and obligations undertaken by the parties under the contract. The promise under a contract may be performed by: Promisor himself: his means contracts which involve the exercise of personal skill or diligence performed by promisor himself. For example A contract to paint a picture. Agent: The promisor or his representative may employ a competent person to perform it. Legal Representatives: A contract which involves the use of personal skill or is founded on personal considerations comes to an end on death of the promisor. As regards any other contract, the legal representatives of the deceased promisor are bound to perform it unless a contrary intention appears from the contract. Third person: When a promisee accepts the performance of the promise from third person, he cannot afterwards enforce it against the promisor. 9

10 Joint promisors: When two or more persons have made a joint promise, then unless a contrary intention appears from the contract, all such persons must jointly fulfill the promise. 2. List the rules regarding the reciprocal promises and explain any two of them. Simultaneous performance of reciprocal promises Order of performance of reciprocal promises Effect of one party preventing another from performing promise Effect of default as to promise to be performed first Simultaneous performance of reciprocal promises: Where the promises are to be performed simultaneously, they are said to be mutual and concurrent. According to section 51 such promises need not perform by the promisor unless the promise is ready and willing to perform his reciprocal promise. Order of performance of reciprocal promises: According to section 52, where the order in which the reciprocal promises are to be performed is expressly fixed in the contract, they must be performed in that order. Where the order is not expressly fixed, they must be performed in that order which the nature of transaction requires. 3. Write brief essay on discharge of a contract by performance Performance means the doing of that which is required by a contract. Discharge by performance takes place when the parties to the contract fulfill their obligations arising under the contract within the time and in the manner prescribed. In such a case, the parties are discharged and the contract comes to an end. Performance of a contract is the most usual mode of its discharge. It may be: Actual performance Attempted performance or tender of performance. Actual performance: When both the parties perform their promises, the contract is discharged. Performance should be complete, precise and according to the terms of the agreement. Most of the contracts are discharged by performance in this manner. 10

11 Attempted performance or Tender of Performance: In certain situations the promisor offers performance of his obligation under the contract at the proper time and place but the promise refuses to accept the performance. This is called as Tender or Attempted Performance. Where a valid Tender is made and is not accepted by the promise, the promisor shall not be responsible for non-performance and he doest not lose his rights under the contract. 4. Mention various mode of discharge of contract. Also explain any one of them. The different mode of discharging a contact are: Discharge by Performance Discharge by agreement Discharge by impossibility of performance Discharge by lapse of time Discharge by operation of law Discharge by operation of law 1. By death: If contracts involving personal skill or ability of the promisor, the contract is discharged / terminated on the death of the promisor. 2. By insolvency: When a person is adjudged insolvent, he is discharged from all liabilities incurred prior to his adjudication. 3. By merger : Merger takes place when an inferior right accruing to a party under a contract merges into a superior right accruing to the same party under the same or some other contract. In such a case, the contract may be discharged. 4. By unauthorized alteration of the terms of a written agreement: Where a party to a contract makes any material alteration in the contract without the consent of the other party, the other party can avoid the contract. 5. By rights and liabilities becoming vested in the same person : When the rights and liabilities under a contract vests in the same person, the other parties are discharged. 5. Discuss the types of breach of contract. There are two types of breach of contract. Anticipatory breach of contract or constructive breach of contract. 11

12 Actual breach of contract Anticipatory breach of contract: Anticipatory breach of contract occurs when a party repudiates his obligation under the contract before the time for performance is due or when a party by his own act cripples himself from performing the contract. In simple words, it is a breach committed before the actual due date of performance of the contract. Examples: S agrees to sing at L's theatre on and from a certain date. Before that date, she enters into a long-term contract to sing at a different theatre. Consequences Can treat the contract as discharged, Can instantly resort to the legal remedies available to him for breach of contract, viz. file a suit for damages or specific performance or injunction. Anticipatory breach: When anticipatory breach occurs, the aggrieved can take the following steps: Actual breach of contract: Actual breach means breach committed either (i) at the time when the performance of the contract is due, or (ii) during the performance of the contract. Examples: D agrees to deliver to B, 15 tons of sugar on 1st August. He fails to do so on 1st August. There is a breach of contract by D. 6. Explain the following in the context of consent for contract discharge by agreement. Novation Alteration Waiver The general rule of law is a thing may be destroyed in the same manner in which it is constituted. This means a contractual obligation may be discharged by a agreement which may be expressed or implied. The various cases of discharge of a contract by mutual agreement are dealt with in Section 62 and 63 and are discussed below: Novation (Section.62): Novation takes places: i. When substitution of a new contract for the original one either between the same parties or between same parties. 12

13 ii. The consideration for the new contract is mutually being the discharge of old contract. iii. Novation should take place before the expiry of the time of the performance of the original contract. Alteration (Section.62): Alteration means a change in one or more terms of a contract with mutual consent of parties. In such a case the old is discharged. Waiver: When a contracting party fails to perform his obligation under the contract, the other party (aggrieved party) may resend the contract and may waive the promisor or release. This is called as Waiver. 13

14 Unit: 3 The Sales of Goods Act 1930-I 1mark Questions 1. When did the Indian Sales of Goods Act came into force? 1st day of July, State two contracts that is not applicable in case of The Sale of Goods Act? Bailment of goods Contract of work and skill 3. Mention two important elements of contract of sales. (1) Transfer of ownership and (2) Price (2) Which section of Sales of Goods Act provides rules for transfer of property in specific goods? Section 19 under Sales of Goods Act 1930 (3) What is meant by specific goods? Specific goods denote goods indentified and agreed upon at the time a contract of sale is made. (4) What is the prime of aim of contract of sale? Transfer of property in goods from the seller to the buyer. (5) What is meant by possession of goods? Possession of goods implies the custody of goods. (6) What is meant by nemo dat quo non habet? No one can pass a better title than what he has (7) State cases where a non owner can convey better title to the bonafide buyer of goods for value. Sale by one of the joint owner (8) Under which Section of Sale of Goods Act the buyer can treat the breach of a condition as a breach of warranty? Under Section 13(1) of the Sale of Goods Act

15 2 Marks Questions 1. What is meant by symbolic delivery? Give an example Delivery of good in case of transit may be made by handling over documents of title of goods to buyer, like bill of landing or railway receipt. 2. Mention one difference between sale and agreement of sell on the bases of transfer of ownership. Sale: transfer of properly in goods passes immediately from the seller to the buyer. Agreement to sell: it occur at future time or to fulfilment of certain condition. 3. What are the essential features of a contract of sale? Parties Subject matter Price Transfer of property Condition Sale and agreement to sell Moveable property 4. Define term of Agreement to sell. Where the transfer of property in the goods passes only after the seller has fulfilled certain conditions subsequently is called an agreement to sell. 5. What is meant by implied conditions and warranties? Implied conditions and warranties are those which the law incorporates into the contract unless the parties stipulated to the contrary. 6. Differential between condition and warranty. Condition: It is essential to the main purpose of the contract and the breach of the condition effect to the legality of the contract Warranty: It is subsidiary to the main purpose of the contract and the breach of the warranty not effect to the legality of the contract. 15

16 7. List three level process of performance of a contract of sale of goods by seller. i. The transfer of property in goods ii. The transfer of possession of the goods iii. The passing of risk 8. State any two rules regarding transfer of property in specific goods. Specific goods in deliverable state Specific goods in a deliverable sate, when the seller has to do anything there to in order to ascertain price. 9. Write any two conditions that needs to be satisfied in case of sales by person in possession of goods under voidable contract. The buyer must possess goods. The contract must not have be rescinded at time of sale. 10. Write any one conditions to be when sale by person not the owner. The buyer should act in good faith. He should presume that the mercantile agent has authority to sell goods 5 Marks Questions 1. Give differential between sale and agreement to sell. Basis Sale Agreement to sell Nature of contract Executed contract. Executory contract. Risk of loss The buyer bears loss even if the goods are in the seller's possession. possession. Breach of contract In case of breach of contract by the buyer, the seller can sue even though the goods are still in possession. If the seller breaches, the buyer has the legal right to get the possession of goods The buyer bears loss even if the goods are in the seller's If the buyer breaches, the seller can only sue for damages but not the price although the goods are in the buyer's possession. If the seller breaches, the buyer's remedy is to claim damages for non performance. Basis Sale Agreement to sell Type Sale means absolute sale. Agreement to sell means conditional sale 16

17 2. List the essential features of a contract of sale? Explain any six of them. Parties Subject matter Price Transfer of property Absolute or conditional Essential elements of contract Sale and agreement to sell Movable property The following elements must co-exist so as to establish a contract of sale of goods under the Sale of Goods Act, 1930: 1. Parties: There should be at least two parties, i.e. buyer and seller. A buyer means a person who buys or agrees to buy. A seller means a person who sells or agrees to sell. 2. Subject matter: The subject matter of the contract must necessarily be goods. 3. Price: Price means the money consideration for a sale of goods. 4. Sale and agreement to sell: It includes both `sale' and `agreement to sell'. 5. Movable property: Transfer of movable goods is regulated by the Sale of Goods Act. 6. Formalities: Formalities observed are not much stringent in entering into contract of sale. It does not prescribe any specific form to form a valid contract of sale. It may be made by simple offer and acceptance. Offer may be made either by the seller or the buyer. 3. Differential between condition and warranty. Condition Relation to main purpose: It is essential to the main purpose of the contract Rights of aggrieved party: Breach of condition gives the aggrieved party a right to repudiate the contract and get damages. Treating condition as warranty: Under certain circumstances, a breach of condition may be treated as a breach of warranty. Legal effect of breach: Breach of condition will affect the legality of the contract Warranties Relation to main purpose: It is subsidiary to the main purpose of the contract. Rights of aggrieved party: Breach of warranty entitles the aggrieved party to claim damages only Treating condition as warranty: A warranty cannot become a condition. Legal effect of breach: Breach of warranty will not affect the legality of the contract. 17

18 4. Under what circumstances breach of condition would be treated as a breach of warranty? A buyer can treat the breach of a condition as a breach of warranty. "where a contract of sale is subject to any condition to be fulfilled by the seller, the buyer may waive the condition or elect to treat the breach of the condition as a breach of warranty and not as a ground for treating the contract as repudiated." In the following cases, a contract is not avoided even on account of a breach of condition: i. Where the buyer altogether waives the performance of the condition, a party may, for his own benefit, waive a stipulation. ii. Where the buyer elects to treat the breach of condition as one of a warranty. That is to say, he may only claim damages instead of repudiating the contract. iii. Where the contract is non-severable and the buyer has accepted either the whole goods or any part thereof. Acceptance means acceptance as envisaged in Section 72. iv. Where the fulfillment of any condition or warranty is excused by law by reason of impossibility or otherwise. 5. What is meant by transfer title? Mention cases where transfer of tile indicates sale by non owners as per Sale of Goods Act. Also explain sales by person not the owner. A true seller can sell and transfer ownership title to the buyer. An absolute owner of the goods can transfer absolutely to the buyer. Subject to provisions of this act and of any other law for the time being in force, where goods are sold by a person who is not the owner thereof and who does not sell them under the authority (or) with the consent of the owner, the buyer acquires no better title to the goods than the seller had. 1. Sale by person not owner 2. Sale by one of the joint owners 3. Sale by a person in possession under a voidable contract 4. Sale by one who has already sold the goods but continues in possession thereof 5. Sale by buyer obtaining possession before the property in the goods has vested in him 6. Effect of estoppels 7. Sale by unpaid seller 18

19 Sale by person not the owner (Section 27): As a rule, a mercantile agent having an authority to sell goods grants a good title to the buyer. A mercantile agent can communicate a good title to the buyer although he sells goods without having any authority from the principal to do so, provided the following conditions are fulfilled: (a) The mercantile agent should be in possession of the goods or documents of title to the goods in his capacity as a mercantile agent and with the consent of the owner. (b) The buyer should act in good faith. He should presume that the mercantile agent has authority to sell goods. 19

20 Unit: 4 The Sales of Goods Act 1930-II 1mark Question 1. When is the seller bound to deliver the goods? Apart from any express contract, the seller of goods is not bound to deliver them until the buyer applies for delivery 2. Who bares expenses to put goods into a deliverable state? The seller bare expenses to put goods into a deliverable state 3. Mention any two rules for to delivery of goods. (1) Place of delivery and (2) Time of delivery 4. How delivery of goods to the carrier is treated? Delivery to the buyer 5. Mention any two modes of delivery of goods. (1) Actual delivery and (2) Symbolic delivery 6. List any two right of an unpaid seller against the buyer personally. (1)Suit for price and (2) Suit for damages 7. Who can be called an unpaid seller? If the seller is not paid by the buyer, the seller is called the unpaid seller. 8. State the rights of an unpaid seller against the goods. Lien Stoppage in transit Resale 9. List any two conditions that need to be fulfilled in right of stoppage. The seller must be paid He must have parted with the possession of goods 10. Give the alternative name for the rights against the buyer personally. Right in personam 20

21 2 Marks Question 1. Define term Delivery? Delivery means voluntary transfer of possession from one person to another. 2. What is meant by concurrent condition? The seller shall be ready and willing to give possession of the goods to the buyer in exchange for price, and the buyer shall be ready and willing to pay the price in exchange for possession of the goods 3. What are the options available to buyer if larger quantity is delivered? Accept the contracted goods and reject the balance Accept the whole bulk Reject the whole lot 4. Mention two options available to buyer if mixed quantity is delivered? Accept the contracted goods and reject the balance Reject the whole lot 5. Under what circumstances acceptance is deemed to take place. Intimated t the seller that he had accepted the goods, Retains the goods after the lapse of a reasonable time, without intimating the seller that he has rejected them 6. Mention any two warranties in an auction sale. Auctioneer warranties that he has authority to sell. He guarantees the quiet possession of the goods by the purchaser. 7. What is meant by lien? Lien means a right which a creditor has to retain possession of goods until payment of the price. 8. What is meant by auction sale? An auction sale is a method of selling merchandise by inviting bids to the world at large, and property in merchandise is sold to the highest bidder. 21

22 9. Define knockout agreements. Buyers join their hands to eliminate competition among themselves at an auction sale. They agree that they will not raise the bid against each other. Among the buyers, only one will bid at the auction. 10. State the rules of auction under section 64 of Sales of Goods Act. Goods put up for sale in lot Completion of sales Right of seller to bid Reserve price Use of pretended bidding 5 Marks Question 1. Define the term delivery. List the rules regarding valid delivery of goods. Also explain any of two. According to Section 2(2), `delivery' means voluntary transfer of possession from one person to another. Rules for valid delivery of goods 1. Place of delivery 2. Time of delivery 3. Goods in possession of a third person: 4. Expenses of delivery 5. Modes of delivery 6. Constructive delivery 7. Symbolic delivery Place of delivery: In case the contract does not provide, goods sold are to be delivered at the place at which they are at the time of sale. This is applicable to specific goods. In case of unascertained goods, goods are to be delivered at the place at which they are produced. Time of delivery: As per the contract, if not stipulated, within reasonable time. The demand for delivery must be made within reasonable hours. What is reasonable is a matter of fact. 22

23 2. Discuss buyer s rights regarding acceptance of delivery of goods. Acceptance (Section 42): Acceptance is deemed to take place when the buyer (a) intimates to the seller that he had accepted the goods; or (b) does any act to the goods, which is inconsistent with the ownership of the seller; or (c) retains the goods after the lapse of a reasonable time, without intimating the seller that he has rejected them. Buyer is not bound to return rejected goods (Section 43): The seller cannot compel the buyer to return the rejected goods. But the seller is entitled to a notice of the rejection. Liability of buyer for neglecting or refusing delivery of goods (Section 44): When the seller is ready and willing to deliver the goods and requests the buyer to take delivery, and the buyer does not take delivery within a reasonable time, he is liable to the seller for any loss occasioned by the neglect or refusal to take delivery, and also reasonable charge for the care and custody of the goods. 3. Discuss rights of unpaid seller against goods. Rights of lien (Section 47): The right of lien can be exercised by him in the following cases only: Where the goods have been sold without any stipulation of credit. Where goods have been sold on credit but the terms of credit have expired Where the buyer becomes insolvent. Rights of stoppage in transit (Section 50): The right of stoppage in transit is exercised only when the following conditions are fulfilled: The seller must be unpaid. He must have parted with the possession of goods. The goods are in transit. The buyer has become insolvent. The right is subject to the provisions-of the Act. Right of re-sale (Section 54): The unpaid seller can exercise the right to re-sell the goods under the following conditions: 23

24 When the goods are of a perishable nature. In such a case, the buyer need not be informed of the intention of re-sale. When he gives notice to the buyer of his intention to re-sell the goods and the buyer does not, within a reasonable time, pay or tender the price. 4. Differentiate between right of lien and right to stoppage in transit. Right of lien 1.Essence: To retain possession 2. Possession: The seller should be in possession of the goods under lien. 3. Ceasing of right of lien: The right of lien comes to an end when the possession of the goods is surrendered by the seller. 4. Prerequisite: Possession must be with the seller. 5. Commencement: Starts with default of the buyer to pay. Right of stoppage in transit 1. Essence: To regain possession. 2. Possession: (i) The seller should have parted with the pos-session, (ii) Possession should be with a carrier and (iii) The buyer has not acquired the possession 3. Ceasing of right of stoppage: Right of stoppage of the goods in transit starts when goods have left the possession of the seller and continues until the buyer or his agent acquired their possession. 4. Prerequisite: The seller must have parted with possession. 5. Commencement: Starts. Where lien ends. 5. List rights of unpaid seller against the buyer. Explain suit for price and suit for damage for non- acceptance. The right in personam are as follows: 1. Suit for price (Section 55) 2. Suit for damages for non-acceptance (Section 56) 3. Repudiation of contract before due date (Section60) 4. Suit for interest [Section 61(2)(a)] Suit for price (Section 55): (a) when a property in goods has passed to the buyer and the buyer wrongfully refuses to pay for the goods, the seller may sue him for the price of the goods [Section 55(l)]. (b) When property in the goods has not passed to the buyer and the goods have not been appropriated to the contract, if the price is payable on a certain day irrespective of delivery, the seller may sue the buyer on his wrongful refusal to pay for the price [Section 55(2)]. 24

25 Suit for damages for non-acceptance (Section 56): Where the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may sue him for damages for non-acceptance. Where there is no default of the seller and the buyer wrongfully refuses to take delivery of the goods within reasonable time, the seller is entitled to recover from the buyer (i) any loss caused by the buyer's refusal to take delivery; and (ii) any reasonable charge for the care and custody of the goods. 6. Write a brief essay on auction sales. An auction sale is a method of selling merchandise by inviting bids to the world at large, and property in merchandise is sold to the highest bidder. An auctioneer is an agent governed by the Law of Agency. When he sells, he is only the agent of the seller. The auctioneer may, however, sell his own property as the principal and need not disclose the fact he is so selling. Different provisions of law on auction sale are dealt under Section 64 of the Sale of Goods Act. 1. Where goods are put up for sale in lots, each lot is prima facie deemed to be subject matter of a separate contract of sale [Section 64(1)]. 2. The sale is complete when the auctioneer announces its completion by the fall of the hammer or in any other customary manner and until such announcement is made, any bidder may retract from his bid [Section 64(2)]. 3. Right to bid may be reserved expressly by or on behalf of the seller and where such a right is expressly reserved, but not otherwise, the seller or any one person on his behalf may bid at the auction [Section 64(3)]. 4. Where the sale is not notified to be subject to a right to bid on behalf of the seller, it shall not be lawful for the seller to bid himself or to employ any person to bid at such sale, or for the auctioneer knowingly to take any bid from the seller or any person representing him. Any sale contravening this rule may be treated as fraudulent by the buyer [Section 64(4)]. 5. The sale may be notified to be subject to a reserved or upset price [Section 64(5)]. 25