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Special Contracts Partnership ActApartnershipisalegalrelationshipbetween2ormorepersonsforthepurposeofcarryingonabusinesswithaviewtoprofit.Personswhohaveagreedintopartnershipwithoneanotherarecalledindividuallypartnersandcollectivelyfirmandthenameunderwhichtheirbusinessiscarriedoniscalledthefirmname.

Essentialelementsofpartnershipare AssociationMin2&max20fornonbankingbusiness(10forbanking). Agreement. Business SharingProfitProfitsorlossmustbesharedamongthepartnersintheagreedratio. MutualagencyEverypartnerisbothanagent&aprincipalforhimself&otherpartners.

Rights Duties LiabilitiesTakepartintheconductofbusiness.

Carrythebusinesstothegreatestcommonadvantage.

Unlimitedliability

Tobeconsulted Just&faithful Accesstobooks Rendertrueaccounts Shareprofits Providefullinformation Interestonadvances Typesofpartnersare

1. ActualpartnersWhotakeanactiverole.2. Dormant/SleepingNotactive,buthasavoiceinmanagement.3. SilentHavenovoiceinthemanagement.4. ProfitonlyNotliableforliability.5. NominalPartneronlyinname.

Registrationofapartnershipfirmmeansenteringofafirm'snameintheregisteroffirmkeptwiththeRegistrar.Itisnotobligatory,butoptionalonly.However,registeredfirmsenjoybetterlegalpositionincomparisontounregisteredfirms.

1. Can'tfileasuitagainstthefirm.2. Can'tfileasuitagainstany3rdpartyfortherecoveryofclaims3. Can'tfileasuitagainstthefirmoranyotherpartner.

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Thereisadifferentbetween'dissolutionofpartnership'and'dissolutionofpartnershipfirm'.Theformerindicatesendingofagreementonlytoreplaceitwithanewone,butthelatterindicatestheendingofpartnershipbusinessaltogether.TheDissolutionofPartnershiptakesplaceunderfollowingcircumstances: Whenthefirmwasconstitutedforafixedterm,ontheexpiryofthatterm. Onthecompletionofparticularventure,ifconstitutedforapurpose. Onthedeathofapartner. Ontheinsolvencyofapartner. Ontheretirementofapartner.

Mainly,therearetwomodesofdissolutionofpartnershipfirm. Byorderofcourt Withoutinterventionofcourt

Apartnermayapplytothecourtforgettingthefirmdissolved.Ongettingsuchapplicationbyanyofthepartnerthecourtmayproceedtoorderthedissolutionofthefirmifanyoneofthepartnerbecomesunsoundmindorbreachthepartnershipagreementorguiltyofmisconductetc.Adissolutionmayhappenwithouttheinterventionofcourtunderbelowcircumstances. Onthedeathofanypartner. Ifanypartnerbecomesinsolvent. Ontheexpiryofthedurationofthefirm. Onthecompletionoftheventure.

Dissolutionofpartnership

1. Onlytheagreementisdissolved,nophysicaldisposaltakesplace.2. Thepartnerswillcontinuetorunthebusinesswithanewagreement.3. Limitedeffectonemployeesordebtorsandcreditorsofthebusiness4. Manydissolutionsofagreementcantakeplaceduringthelifeofapartnershipbusiness.5. Admission,retirementandordeathofapartnercanresultincompulsorydissolutionofexisting

agreement.DissolutionofPartnershipFirm

1. TheFirmisdissolved,bysellingoffassetsandsettlingliabilities.2. Thepartnerswilldiscontinuethebusiness3. Sincethebusinessiscloseddownitaffectstheworkers,debtorsandcreditorsofthefirm4. Dissolutionoffirmcantakeplaceonlyonceinthelifetimeofapartnershipbusiness.

Keyadvantages&disadvantagesofpartnershipfirmsareAdvantages DisadvantagesEasytoformnotnecessarytogetthefirmregistered. Unlimitedliability

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Availabilityoflargeresources. Uncertainlife

Betterdecisions NotransferabilityofshareFlexibilityinoperations Lackofharmony Limitedcapital

Law of Agency Thelawofagencyisconcernedwiththerelationshipthatariseswhenoneindividual(aprincipal)eitherexpresslyorimpliedlyusestheservicesofanother(anagent)tocarryoutaspecifictaskonhisorherbehalf. Anagentmaybeanemployeeofprincipal. Checkoutclerkisanagentofthesupermarketcompany. Transactionishandledbysalesperson,butthecontractforthesaleofgoodisbetween

customerandsupermarketcompany. Anagentcanalsobeanindependentcontractorlikeinsuranceagent,stockbroker. Anagentcanactsolelyforoneprincipalormaybeanagentforseveralprincipals. Anagentmayauthorizedtoactinjustonetransactionorregularly.

Therelationshipinvolves3parties. PrincipalApersononwhosebehalfanagentacts. AgentApersonappointedtoactforanother,usuallyincontractmatters. ThirdPartyAthirdpartyisanyonewhoisnoteitheranagentoraprincipal.

Anexampleis,alawyermaybeengagedasanagenttoperformcertainlegalservicesonbehalfofaclientorarealestateagentmaybeengagedtobringabuyer&sellertogether.Toconstituteacontractofagency,thefollowingessentialsarerequired.

1. Agreementbetweenprincipal&agent.2. CompetencyofprincipalAgeofmajority&soundmind.3. Considerationnotnecessary

Anagencycanbecreatedmultipleways.

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AgencybyExpressAgreementAnagencyrelationshipestablishedbyanexpressoralorwrittenagreement.

AgencybyImpliedAgreementImpliedagencyoccursfromaconduct,situationorrelationofparties.(Estoppel)

AgencybyNecessityAgencythatmayariseincertaincircumstancesoutofnecessitywhereitisnotpossibletoobtaintheauthorityoftheprincipaltoact.Emergency@Hospital.

AgencybyRatificationofActsAprincipalmayincertaincircumstanceswishtotakeadvantageofacontractthatanagentnegotiatedonhisbehalf.Retrospectiveinnature.

AgencybyOperationofLawAgencybyoperationoflawariseswherethelawtreatsonepersonasanagentofanother.

Basedonauthority,agentscanbeclassifiedas

1. UniversalagentsAuthorizedtohandleeverything.PowerofAttorney.2. GeneralagentsAuthorizedtohandlebusinessspecificactivities.3. SpecialagentsAuthorizedtohandleonlyaspecificprojectortransaction.

Basedonnatureofwork,agentscanbeclassifiedas MercantileagentsOnewhoisauthorisedtosellgoodsortoconsigngoodsforthepurposeof

saleortobuygoodsortoraisemoneyonthesecurityofgoods.IncludesBanker,Factor,Auctioneer,Broker,CommissionAgent,&DelCredereAgent.

NonmercantileagentsNotengagedinbusinessofsellingorbuyinggoods,butactintheirrespectiveprofessionalcapacities.i.e.renderprofessionalservicesfortheirPrincipal.IncludesSolicitors,Attorneys,C&FAgents,InsuranceAgents,etc.

Anagencycangetterminated Byactsofpartiesbyagreementorbyrevocationbycompletion. Byoperationsoflawdeathorinsolvencyorunsoundmindsofeitherparties.

However,whenanagencyagreementisterminated,noticetothirdpartiesisimportant.Otherwise,theagentmaystillbindtheprincipalincontractwithanunsuspectingthirdparty.DutiesofAgent RightsofAgentNottotakeabribe. Toclaimindemnity.Nottomakeasecretprofit. Toremuneration.

Tomaintainconfidentiality. Toalienovertheprincipalsproperty.Toperformagreedtasks&followinstructions. Toexercisecare&skill.

Sales of Goods

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SellerApersonwhosellsoragreestosellgoods.Goods: ExistingGoods,whichareownedandpossessedbytheselleratthetimeofsale. FutureGoods,whichdonotexistatthetimeofthecontractofsale.Needtomanufactureor

acquire.Therecanonlybeanagreementtosell. ContingentAgreementtosell,butuncertainaboutacquiringthegoods.Aagreestosellthe

goodsloadedontheshipTitanic,whichiscomingfromLondontoBombay.Theshipmayormaynotarrive.So,thesegoodswillbecalledascontingentgoods.

Sale AgreementtoSaleImmediatetransferofownershiptobuyer OwnershipremainswiththesellerItisexecutedcontract ItisanexecutorycontractRiskpassestobuyer RiskdoesntpassestobuyerBuyercangetgoodsevenifsellerhasbecomesinsolvent

Deliverycanberefusedbysellerifbuyerbecomesinsolvent.

Deliverytoreceiverifbuyerbecomesinsolventbeforethepaymentofprice

Delivery: Actualdelivery Symbolicdeliverydeliveryofkeyofthecar. ConstructivedeliveryWherethethirdpartywhoisinpossessionofgoods,acknowledgeto

holdgoodsonbehalfofthesellerisknownasconstructivedelivery.Asells100bagsofcementlyinginBsgodown.Bagreestoholdthe100bagsofcementonbehalfofA.

Allexpensesofmakingdeliveryofgoodsshallbepaidbyseller.Thecontractofsalemayprovideforanyofthefollowingmethods. Immediatedeliveryofgoods. Immediatepaymentofpricebutdeliveryatsomefuturedate. Immediatepaymentofpriceandimmediatedeliveryofgoods. Deliveryorpaymentorbothmadeininstallments. Deliveryorpaymentorbothwillbemadeatfuturedate.

BuyerAperson,whobuysoragreestobuythegoods.SaleofGoodsAct,1930: ExtendstowholeIndiaexceptJ&K CameintoforcewrtJuly01,1930 Scopeincludesbothasale&anagreementtosell Doesnotdealwiththesaleofimmovableproperty(TransferofPropertyAct,1882)

Validcontractofsaleshouldhave

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1. Theremustbetwopartiesseller&buyer2. Theremustbeatransferofpropertyingoods(ownershiptransfer)3. Theremustbepriceinvolved.4. Allessentialsofavalidcontract.

Contract for Work Salesofgoodsactappliestocontractsforthesupplyofservicessuchashairdressing,plumbingandcontractsunderwhichthesupplieragreestosupplygoodsandcarryoutaservice,suchassupplyandfitakitchen.Thekitchenunitsandappliancesarethegoodsandthefittingoftheseitemsisthesupplyofaservice.Whereaserviceissuppliedandthesupplierisactinginthecourseofabusiness,thefollowingtwotermsareimpliedintothecontract. Thesupplierwillcarryouttheservicewithreasonablecareandskill. Ifnotimeisfixed,thentheworkwillbecarriedoutwithinareasonabletime.

Inaddition,impliedintoallcontractsforthesupplyofaservice,whetheractinginthecourseofabusinessornot,is: Ifnopriceisfixedthenthepricechargedwillbereasonable.

Reasonablecareandskillisanobjectivetestand,forexample,aplumbercontractedtoinstallabathroomwillbeexpectedtocarryouttheworkofacompetenttradesmanratherthananamateur.

Conditions & Warranties Generally,atthetimeofsale,thesellermakessomerepresentationaboutthegoods.Someoftheserepresentationsareinnatureofopinion&othersareinnatureoffacts.Representationinthenatureoffactsbecomespartofthecontract&iscalledastipulation.Stipulationsmaybeconditionsorwarrantydependsuponitsimportanceinrelationtothecontract.Stipulationswhichareessentialtothemainpurposeofthecontractisknownasconditions.Breachofconditionsgivestheaggrievedpartyrighttoterminatethecontract.Stipulationswhichiscollateraltothemainpurposeofthecontractiswarranty.Breachofwarrantygivesrisetoaggrievedpartyrighttoclaimdamage,butcontractcantbeterminated.

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ConditionPgoestoR,ahorsedealer,andsays,Iwantahorsewhichcanrunataspeedof30km.perhour.Thehorsedealerpointsoutaparticularhorseandsays,thiswillsuityou.Pbuysthehorse.LateronPfindsthatthehorsecanrunonlyataspeedof20km./hr.thereisabreachofcondition,Pcanrepudiatethecontract,returnthehorsetoRandgetbacktheprice.WarrantyAssumethatafarmer,intendingtoplantnotillsoybeans,approachesasellertobuyherbicide.Assumefurtherthatthebuyerrequestsaparticularherbicidemixbutthesellersuggestsalessexpensivemix.Ifthechemicalsfailtokillcrabgrassandthefarmerhasalowyieldofsoybeans,thefarmercouldsuethesellerforbreachofthewarrantyoffitnessforaparticularpurposebecausethesellerknewwhatthefarmerrequired.Conditions&Warrantiesmaybeexpressorimplied.Expressconditions&warrantiesarethose,whichthepartiesagreeorallyorinwriting.Impliedconditionsarethose,whichareimpliedbythelawintheabsenceofanyagreementtothecontrary.Someoftheimpliedconditions,whicharepartofSalesofGoodActare SalebydescriptionWherethegoodsaresoldbydescription(aboutqualityorfeatures),there

isanimpliedconditionthatthegoodsshallcorrespondtothedescription. SalebysampleWherethegoodsaresoldbysample,thebulkshallcorrespondtosamplein

quality.Also,thebuyershallbegivenareasonableopportunitytocomparethegoodswiththesample.

SalebydescriptionaswellassampleIfthesaleisbysampleaswellasdescription,bothconditionsshallbesatisfied.

Someoftheimpliedwarranty,whicharecontainedintheSalesofGoodsActare WarrantyastoquietpossessionThebuyerofgoodsshallhaveandenjoythequietpossession

ofthegoods.Ifthebuyerisinanywaydisturbedbyanypersonhavingasuperiorrightthantheseller,thebuyercanclaimdamagesfromtheseller.

Warrantyagainstencumberancesgoodsshallbefreefromanychargeorencumbrance WarrantytodisclosedangerousnatureofgoodsIncaseofsaleofdangerousgoods,theseller

isunderanobligationstowarnthebuyerabouttheprobabledanger.Failuretodosowillmakethesellerliabletopaydamages.

Conditions WarrantyStipulationsthatareessentialformainpurposeofcontract.Nonfulfillmentofsuchwillmeanlossoffoundationofcontract.

Warrantyiscollateraltothemainpurposeofcontract.

Acontractofsalecantbefulfilledunlesstheconditiontoit,isfulfilled.

Maincontractcanbefulfilledevenifthewarrantyisnotfulfilled.

Incaseofbreachofcondition,theaggrievedpartycanrejectthecontract.

Incaseofbreachofwarranty,theaggrievedpartycanonlyclaimfordamage.

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Breachofconditioncanbetreatedasbreachofwarrantyiftheaggrievedpartyishappywithcompensation.

Breachofwarrantycantbetreatedasbreachofcondition.

DoctrineofCaveatEmptorThismeansletthebuyerbeware.Accordingtothis,itisthedutyofthebuyertobecarefulwhilepurchasinggoods.Intheabsenceofanyenquiryfromthebuyer,thesellerisnotboundtodisclosethedefectsinthegoods.Ifthegoodsturnouttobedefective,thebuyercantsuetheseller,asthereisnoimpliedundertakingbythesellerthatheshallsupplygoodstosuitthebuyerspurpose.

Unpaid Seller Asellerofgoodsisdeemedtobeunpaidinthefollowingcases. Thepricemustbedue,butnotpaid. Smallportionofthepaymentispending. AnegotiableinstrumentlikeBoEwasreceived,butthesamehasbeendishonored.

Theunpaidsellerhastwotypesofremedyifthebuyerbreachesthecontractofsale.Thesellercantaketheactionagainstthebuyerpersonallybysuinghimforthecontractpriceorfordamagesfornonacceptanceofgoods.Alternatively,thesellercantakeactionthatinvolvesaclaimonthegoods.AgainstGoods AgainstBuyerLienagainstgoods Claimforpriceofgoods.Resaleofperishablegoods Claimfordamagesfornonacceptanceofgoods.Stopthegoodsintransit. BuyersrightagainstsellerorremediesagainstsellerareAgainstGoods AgainstSellerRejectthegoods Claimspecificperformance.Repairorreplacement Claimdamages.

Bailment A'bailment'isthetransferofgoodsbyonepersontoanotherforsomepurpose&whenthepurposeisaccomplished,goodsmustbereturnedorotherwisedealtwithinaccordancewiththeownersinstructions.Inotherwords,bailmentisthetemporarytransferofpossessionofpersonalproperty.Examplesarecarrental,repairofgoods,storageofgoods,carparkingetc. BailorTheownerofpropertyinabailment. AgreementExpressorimplied. Goods DeliveryActualorConstructive.

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PurposeExpressorImplied BaileeThepersonwhogainspossessioninabailment.

BailorAgreementGoodsDeliveryPurposeBaileeReturn/DisposalofGoodsTherearedifferenttypesofbailment.Basedonbenefits ExclusivebenefitofBailorJ,neighbourofK,agreestolookafterKscarwhileheisoutof

station.Kisbenefited. ExclusivebenefitofBaileeZlendsabooktoYforreading.Yisbenefited. MutualbenefitofbothAhiresfurniturefromB,bypaymentofhirecharges,BothAandB

arebenefited.Basedonrewards,bailmentcanbeclassifiedas GratuitousBailmentNeitherBailororBaileegetsanyremuneration,e.g.Alendshisbookto

hisfriend. NonGratuitousBailmentBailororBaileegetsremuneratione.g.Ggiveshistelevisionsetfor

repairtoH,atechnician.Hgetspaidforthejob.Bailmentcomestoanendunderthefollowingcircumstances.

1. Onexpiryofstipulatedperiod.2. Ontheaccomplishmentofpurpose.3. Destructionofsubjectmatterofbailment.4. Bybailorsactinconsistentwithconditions.

BailorDuties&RightsDuties RightsDisclosefaultsingoods Terminatethebailmentincaseofunauthorized

use.Bearextraordinaryexpenses Claimcompensationincaseofunauthorizeduse.Receivebackgoods,otherwiseneedtopayallexpensesincurredforthesafecustodyofgoods.

Demandgoodsbackaftertheaccomplishmentofpurpose.

Claimdamageincaseofnegligence.BaileeDuties&RightsDuties Rights

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Takereasonablecare Righttoclaimdamages,ifanylossduetodamagesnotdisclosedbybailor.

Nottomakeunauthorizeduseofgoods RecoverchargesincurredNottomixgoods FilesuitagainstwrongdoerReturngoods RightoflienThebaileehastherighttoretainthe

goodsdeliveredtohimuntilthechargesduetohimarepaidbythebailor.

Pledgeisabailmentofgoodsassecurityforpaymentofdebtorperformanceofapromise. Pledger(Pawnor)Personwhodeliversthegoodsassecurity. Pledgee(Pawnee)Persontowhomthegoodsaresodelivered.

Theownershipofthegoodsremainswiththepledgor.Itisonlyaqualifiedpropertythatpassestothepledgee.Forexample,ifAborrows50KfromBandkeepshergoldornamentsassecurity,acontractofpledgearises.Here,AisthepledgorandBisthepledgee.Pledgeisdifferentfromsalesasinapledgeonlypossessionspasssestotheotherparty.Butinacontractofsale,bothpossessionandownershipofthepropertyistransferredtothebuyer.Inapledge,thefirstpartyretainstheownershipoftheproperty,whilethesecondpartytakespossessionofthepropertyuntilthetermsofthecontractaresatisfied.Ifthetermsofthecontractarenotmet,thesecondpartycansellthepropertytosatisfyhisdebt.ANyexcessprofitfromthesalemustbepaidtothedebtororfirstparty.Butifthesaledoesnotmeettheamountofthedebt,thenlegalactionmaybeinitiatedagainstthepledger.Thepledgedpropertymustbeinthepossessionofthepledgee.Thiscanbeeitherbythepledgeesactualphysicalpossessionorbyconstructivepossession.Whileinactualpossession,thegoodsareheldbypledgee&inconstructivepossessionthepledgeehassomecontroloverthepropertywhichoccurswhenactualpossessionisimpossible.

Mortgage of Goods (490) Amortgageisaveryoldmethodofsecuringpaymentofindebtedness.Initssimplestform,itinvolvesthetransferofthedebtorstitleorinterestinapropertytothecreditorontheconditionthatthetitleorinterestwillbereconveyedtothedebtorwhenthedebtispaid.Mortgageistheformalagreementmadebetweentheparties,underwhichthedebtorisreferredtoasthemortgagorandthecreditorthemortgagee.

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TypesofMortgages Legal(First)mortgage Equitable(Secondorlater)mortgagesMortgageofmortgagorsequity.

Mortgagor MortgageePaymentprincipal&interest Quitepossession.NottousegoodsPaymentofTaxesmunicipaltaxes DischargeonpaymentInsurancenotmandatoryinIndia. Takereasonablecare.Nottowastenottodoanyactthatwouldreducethevalueofproperty.

Disclosefaultingoods MortgageesRemedies AccelerationAclausethatrequiresthepaymentofthebalanceofthedebtonthehappening

ofaspecificevent,suchasdefaultonaninstallmentpayment. SaleunderpowerofsaleClausethatpermitsthemortgageetosellorleasetheproperty,ifthe

defaultinpaymentpersistsforaperiodoftime. Saleundercourtorder PossessionWhendefaultoccurs,themortgageehasarighttopossessionofthemortgaged

premises.

Time Purchases & Relationships Inacontractofhire,ownershipofgoodsdoesnotpassbutthecustomerhastherighttopossessandusegoodsforalimitedtime.

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Contractsofhirearecommoninbusiness,particularlyinthebuildingandconstructionindustrywhereequipmentsuchascranes,excavators,andscaffoldingareoftenhired.Othercommoncontractsofhireareforthehireofcars.Theimpliedtermsaresimilartothoseforthesupplyofgoods.Thereisalsoanimpliedrighttotransferpossessionfortheagreedperiodofhire.Thetermsrelatetothestateofthegoodsatthebeginningofthehiringandforareasonabletimeafterwards.Itdoesnotimposeadutyonthesuppliertomaintainandrepairthegoods,butthismaybeprovidedforexpresslyinthehirecontract.Ahirepurchasecontractiswherethehireragreestohiregoodsforafixedperiodoftimeandisgiventheoptiontopurchasethegoodsforanominalsumattheendofthatperiodoftime.Newcarsareoftenpurchasedbyconsumersunderahirepurchaseagreement.Thecarthatthecustomerdesiresissoldbythegaragetoafinancecompany.Thiscompanythenentersintoahirepurchaseagreementwiththecustomer.Thecarisinfacthiredbythecustomerforanumberofyearsinreturnforamonthlypayment.Thefinalinstalmentisthenominalsumtopurchasethecar,andownershipofthecaristhenpassedfromthefinancecompanytothecustomer.