SECTION B

Q3. Definition of unpaid seller

(1)
(a)

The seller of goods is deemed to be an "unpaid seller" within the meaning of this Part
when the whole of the price has not been paid or tendered;

(b) when a bill of exchange or other negotiable instrument has been received as conditional payment, and
the condition on which it was received has not been fulfilled by reason of the dishonour of the instrument or
otherwise.
(2) In this Division the term "seller" includes any person who is in the position of a seller, as for instance an
agent of the seller to whom the bill of lading has been indorsed or a consignor or agent who has himself paid or is
directly responsible for the price.
Rights of an Unpaid Seller against the goods
An unpaid seller has two-fold rights, viz.,;
I.
Rights of unpaid seller against the goods, and
II. Rights of unpaid seller against the buyer personally. We shall now examine these rights in detail.
1. Rights of Unpaid Seller against the Goods.
An unpaid seller has the following rights against the goods notwithstanding the fact that the property in the goods
has passed to the buyer:
1.
Right of lien;
2.
Right of stoppage of goods in transit;
3.
Right of resale [Sec. 46 (1)].
1. Right of lien (Sec. 47)
Lien is the right to retain possession of goods and refuse to deliver them to the buyer until the price due in respect
of them is paid or tendered. An unpaid seller in possession of goods sold is entitled to exercise his lien on the
goods in the following cases:
(a) Where the goods have been sold without any stipulation as to credit;
(b) Where the goods have been sold on credit, but the term of credit has expired:
(c) Where the buyer becomes insolvent, even though the period of credit may not have yet expired.
In the case of buyers insolvency the lien exists even though goods had been sold on credit and the period of credit
has not yet expired. When he goods are sold on credit the presumption is that the buyer shall keep his credit good.
If, therefore, before payment the buyer becomes insolvent, the seller is entitled to exercise this right and hold the
goods as security for the price.
2. Right of Stoppage of Goods in Transit:
Meaning of Right of Stoppage of Goods in Transit: The right of stoppage in transit means the right of stopping the
goods while they are in transit, to regain possession and to retian them till the full price is paid.
The essential feature of stoppage in transit is that the goods should be in the possession of a middleman or some
other person intervening between the vendor who has parted with and the purchaser who has not received them.
Conditions under which Right of Stoppage in Transit can be Exercised [Section 50]: The unpaid seller can exercise the
right of stoppage in transit only if the following conditions are fulfilled:
(i) The seller must have parted with the possession of goods, i.e., the goods must not be in the possession of seller.
(ii) The goods must be in the course of transit.
(iii) The buyer must have become insolvent.
Note: The buyer is said to be insolvent when he has ceased to pay his debts in ordinary course of business, or cannot
pay his debts as they become due, whether he has committed an act of insolvency or not.

3. Right of Resale
The right of resale is a very valuable right given to an unpaid seller. In the absence of this right, the unpaid sellers
other rights against the goods, namely, lien and stoppage in transit, would not have been of much use because these
rights only entitle the unpaid seller to retain the goods until paid by the buyer. If the buyer continues to remain in
default, then should the seller be expected to retain the goods indefinitely, specially when the goods are perishable?
Obviously, this cannot be the intention of the law. Section 54, therefore, gives to the unpaidseller a limited right to
resell the goods in the following cases:
(a)
Where the goods are of a perishable nature; or
(b) Where such a right is expressly reserved in the contract in case the buyer should make a default;
Q4. A partnership is an arrangement where parties, known as partners, agree to cooperate to advance their mutual
interests. The partners in a partnership may be individuals, businesses, interestbased organizations, schools, governments or combinationsorganizations may partner together to increase the
likelihood of each achieving their mission and to amplify their reach. In what is usually called an alliance,
governments may partner to achieve their national interests, sometimes against allied governments holding
contrary interests, as occurred during World War II and the Cold War. Some partnerships occur at personal levels,
such as when two or more individuals agree to domicile together, while other partnerships are not only personal,
but private, known only to the involved parties.
The essential characteristics of partnership are as follows:
1. Two or more persons:
There must be at least two persons to form a partnership. A person cannot enter into partnership with himself. The
maximum number of persons in a partnership should not exceed 10 in case of banking business and 20 in other
types of business.
If the number of partners exceeds the prescribed maximum, it would become an illegal association of persons. A
firm cannot become a partner of another firm though its partners can join any other firm as partners.
2. Agreement:
Partnership is the outcome of an agreement between persons. The relation of partnership arises from the formation
of a contract and not from status or birth.
If a proprietor gives a share in profits to his employee it will not be called a partnership unless there is an
agreement of partnership between the two. The agreement may be oral or in writing but it must satisfy all the
essentials of a valid contract.
3. Lawful business:
A partnership can be formed only for the purpose of carrying on a business. An association of persons who jointly
own a house without carrying on a business is not partnership.
Moreover, the business carried on by the partners must be lawful. Illegal acts such as theft, dacoity, smuggling,
etc., cannot be called partnership.
4. Sharing of profits:

The agreement between the partners must be to share the profits of business. There can be no partnership without
the intention of mutual gain. The profits must be distributed among the partners in an agreed ratio.
Similarly, losses should be shared among the partners. However, sharing of profits is not a conclusive proof of
partnership. For example, a manager may be given a share in profits of the firm.
5. Mutual agency:
Partnership business can be carried on by all the partners or by any of them acting on behalf of the others. In other
words, every partner is an implied agent of the other partners and of the firm. Each partner is liable for acts
performed by other partners on behalf of the firm.
The above mentioned features are the real tests of partnership. In addition, partnership has the following
characteristics:
6. Utmost good faith:
The relations between partners are based upon mutual trust and confidence. Every partner is expected to act in the
best interests of other partners and of the firm as a whole.
He must observe utmost good faith in all the dealings with his co-partners. He must render true accounts and make
no secret profits from the business.
7. Unlimited liability:
Every partner is jointly and severally liable to an unlimited extent for the debts of the partnership firm. In case the
assets of the firm are insufficient to pay the debts in full, the personal property of each partner can be attached to
pay the creditors of the firm.
8. Restriction on transfer of interest:
No partner can transfer his share in the partnership without the prior consent of all other partners.
Q7.VOID AGREEMENT
An agreement not enforceable by law is said to be void [Sec.2(g)]. Thus a void agreement does not give rise to any
legal consequences and is void ab-initio. In the eye of law such an agreement is no agreement at all from its very
inception.
The following agreements have been expressly declared, to be void by the Indian Contract Act:
1. Agreements in restraint of marriage (Sec. 26).
2. Agreements in restraint of trade (Sec. 27).
3. Agreements in restraint of legal proceedings (Sec. 28).
4. Agreements the meaning of which is uncertain (Sec. 29).
5. Agreements by way of wager (Sec. 30).

6. Agreements contingent on impossible events (Sec. 36).

7. Agreements to do impossible acts (Sec. 56).
1. Agreements in Restraint of Marriage:
Every individual enjoys the freedom to marry and so according to Section 26 of the Contract Act every agreement
in restraint of the marriage of any person, other than a minor, is void.
2. Agreements in Restraint of Trade:
The Constitution of India guarantees the freedom of trade and commerce to every citizen and therefore Section 27
declares every agreement by which any one is restrained from exercising a lawful profession, trade or business of
any kind, is to that extent void. Thus no person is at liberty to deprive himself of the fruit of his labour, skill or
talent, by any contracts that he enters into.
3. Agreements in Restraint of Legal Proceedings:
Section 28, as amended by the Indian Contract (Amendment) Act, 1996, declares the following three kinds of
agreements void:
(a) An agreement by which a party is restricted absolutely from taking usual legal proceedings, in respect of any
rights arising from a contract.
(b) An agreement which limits the time within which one may enforce his contract rights, without regard to the
time allowed by the Limitation Act.
(c) An agreement which provides for forfeiture of any rights arising from a contract, if suit is not brought within a
specified period, without regard to the time allowed by the Limitation Act.
4. Uncertain Agreements :
Agreements, the meaning of which is not certain, or capable of being made certain, are void (Sec. 29). Through
Section 29 the law aims to ensure that the parties to a contract should be aware of the precise nature and scope of
their mutual rights and obligations under the contract.
5. Wagering Agreements :
What is a wager? Literally the word wager means an a bet: something stated to be lost or won on the result of a
doubtful issue, and, therefore, wagering agreements are nothing but ordinary betting agreements.
6. Agreements Contingent on Impossible Events:
Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the
impossibility of the event is known or not to the parties to the agreement at the time when it is made. (Sec. 36)
7. Agreements to do Impossible Acts:

An agreement to do an act impossible in itself is void. (Sec. 56 )

Q8 1) Consumer Protection Act, 1986 is an Act of the Parliament of India enacted in 1986 to protect the interests
of consumers in India. It makes provision for the establishment of consumer councils and other authorities for the
settlement of consumers' disputes and for matters connected therewith.
Consumer Protection Council
Consumer Protection Councils are established at the national, state and district level to increase consumer
awareness.[1]
Objectives of Central Council
The objectives of the Central Council is to promote and protect the rights of the consumers such as:1. the right to be protected against the marketing of goods and services which are hazardous to life and
property.
2. the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services,
3. the right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous
exploitation of consumers; and
4. the right to consumer education.
5. the right against consumer exploitation
The Constitution of the Central Consumer Protection Council and the Working Groups.(1) The Central Government shall, by notification in the Official Gazette constitute the
Central Consumer Protection Council (herein after referred to as the Central council) which
shall consist of the following 150 members, namely:(a) the Minister in-charge of Consumer Affairs in the Central Government who shall be the
Chairman of the Central Council;
(b) the Minister of State (where he is not holding independent charge) or Deputy Minister
[in charge of Consumer Affairs in the Central Government] who shall be Vice-Chairman of
the Central Council;
(c) the Minister of Food & Civil Supplies or Minister in-charge of Consumer Affairs in State;
(d) eight members of Parliament- five from the Lok Sabha and three from Rajya Sabha;
(e) the Secretary of the National Commissioner for Scheduled Castes Scheduled Tribes;
(f) representatives of the Central Government Department and autonomous organisations
concerned with consumer interests-not exceeding twenty;
(g) representatives of the Consumer Organisations or consumers- not less then thirty five;
(h) representatives of women- not less then ten;

2 )Rights and duties of finder of lost goods

Responsibility of finder of goods (Sec. 71). Section 71 lays down another circumstance in which also a quasicontractual obligation is to be presumed. It says: A person.. who finds goods belonging to another and takes them

into his custody, is subject to the same responsibility as a bailee. Thus law between the owner and finder of the
goods
also
implies
an
agreement
and
the
latter
is
deemed
to
be
a
bailee.

Rights of finder of goods. Till the true owner is found out, he can retain possession of the goods against
everybody in the world. He is entitled to receive from the true owner, all expenses incurred by him for preserving
the goods or finding the true owner. He has a lien on the goods for the money so spent i.e., he can refuse to redeem
the goods to the true owner until these moneys are paid. He is not entitled to file a suit for the recovery of such
sums. But he can file a suit against the owner to recover any reward, which was offered by the owner for the return
of the goods, provided he came to know of the offer of reward before actually finding out the goods.
The finder of goods is entitled to sell the goods if the owner cannot be found out or if he refuses to pay the lawful
charges of the finder, in the following two situations only:
(a) When the thing is in danger of perishing or of losing the greater part of its value, or
(b) When the lawful charges of the finder amount to two-thirds of the value of the goods found. The true owner is
entitled to get the balance of sale proceeds, if there is surplus after meeting the lawful charges.
SECTION A
Q1 1) Contract
In law, a contract (or informally known as an agreement in some jurisdictions) is an agreement having a lawful
object entered into voluntarily by two or more parties, each of whom intends to create one or more
legal obligations between them. The elements of a contract are "offer" and "acceptance" by "competent persons"
having legal capacity who exchange "consideration" to create "mutuality of obligation
CHARACTERISTICS OF CONTRACT

A contract must have two parties with legal capacity to enter a contract (for example, they must be legally
able to sell the goods the contract relates to. Many contracts will also require the persons involved to be adults.)

The parties must follow the general steps of offer, acceptance, and consideration. That is, someone must
present the proposed contract terms, which may then be accepted or rejected by the other party. If they are
accepted, consideration is required: something of value must change hands as payment for the promise.

An enforceable contract should contain as many of the terms agreed between the parties as possible In a
contract for kitchen renovations for example, you may tell a building company that you want a new kitchen bench
installed and agree upon a price for the work which will be done in exchange for that payment. However unless the
terms of the arrangement are fully agreed, contract law issues could then arise in the absence of terms relating to
the type of kitchen bench, or the time for completion of the installation.

Some contracts will have a requirement of writing. Common examples of this include guarantees and real
estate sales.

Most agreements made in a business context will be interpreted as being legally binding.

Q1 2) Legal Capacity to Enter Into a Contract

When two people enter into a contract, six elements must be met. Those elements include:

Offer that specifically details exactly what will be provided

Acceptance (the agreement by the other party to the offer presented)

Consideration (the money or something of interest being exchanged between the parties)

Capacity of the parties in terms of age and mental ability

Intent of both parties to carry out their promise

The object of the contract is legal and not against public policy or in violation of law

The element we will focus on is capacity, and it means a person's legal ability to enter into a contract..
The contracts that a business enters into with its customers and other individuals are important to its long-term
growth and profitability. However, certain individuals lack the capacity or legal ability to enter into contracts. The
law defines who these people are and prevents other individuals and businesses from having valid contracts with
those who are said to lack capacity.
Q1 3)
BASIS FOR
COMPARISON

COERCION

UNDUE INFLUENCE

Meaning

Coercion is an act of threatening which

involves the use of physical force.

Undue Influence is an act of

influencing the will of the other party.

Sections

It is governed by Section 15 of the

Indian Contract Act, 1872.

It is governed by Section 16 of the

Indian Contract Act, 1872.

Use of

Psychological pressure or Physical

force

Mental pressure or Moral force

Purpose

To compel a person in such a way that

he enters into a contract with the other
party.

To take unfair advantage of his

position.

Criminal Nature

Yes

No

BASIS FOR
COMPARISON
Relationship

COERCION

The relationship between parties is not

necessary.

UNDUE INFLUENCE

The act of undue influence is done only

when the parties to the contract are in
relationship. Like teacher - student,
doctor - patient etc.

Q1 4) Performance of a contract:
Execution of a contract by which the contracting parties are automatically discharged (see discharge of
contract) of their obligations under it. Although contracts usually call for full and precise performance,
a substantial performance may be acceptable under certain circumstances, on a pro rata basis, or
on payment of damages for
the
unfinished
or defective
performance.
Performance of a contract:
1.
2.
3.

by both parties results in the contract being discharged in its entirety;

by one party discharges that party from further obligation to perform its obligations;
by a supplier gives rise to the right to be paid, subject to the terms of the contract (such as a requirement for
the customer to tender payment in advance);
4.
which is partial in respect of an entire agreement does not entitle the supplier to be paid;
5.
in a divisible contract, the obligations of the contracting party are independent of the other partys
obligations to perform. Accordingly, one party can demand performance without performing themselves,
subject to the terms of the agreement. For instance, a contract may require payment of payment for services. If
the supplier is in breach of the contact, he still may be required to be paid;
6.
in the case of an entire agreement, neither party is may demand that the other perform unless they
themselves have performed or are ready, willing and able to perform the contract;

Q1 5)Implied Warranty
A promise, arising by operation of law, that something that is sold will be merchantable and fit for the purpose for
which it is sold.
Under a sales contract, whether written or oral, there is a guarantee that the item sold is merchantable and fit for
the purpose intended. This guarantee arises by operation of law and is in addition to any expressed warranties that
are provided at the time of sale. These implied warranties exist to protect consumers who might otherwise pay for
products that are not as represented by the merchant.

Every time goods are bought and sold, a sales contract is created: the buyer agrees to pay, and the seller agrees to a
ccept, a certain price inexchange for a certain item or number of items. Sales contracts are frequently oral, unwritte
n agreements. The purchase of items like acandy bar hardly seems worth the trouble of drafting an agreement spell

ing out the buyer's expectation that the candy bar will be fresh andedible. Implied warranties protect the buyer whe
ther or not a written sales contract exists.
Q1 9) CONSUMER PROTECT ACT
Consumer Protection Act, 1986 is an Act of the Parliament of India enacted in 1986 to protect the interests of
consumers in India. It makes provision for the establishment of consumer councils and other authorities for the
settlement of consumers' disputes and for matters connected therewith.
NEED OF CONSUMER PROTECT ACT

1. Cooling-off period
2. Misrepresentation
3. Delivery of goods
4. Your rights under a contract

Cooling-off period
You have a cooling-off period when you sign contracts:

for a product or service you buy from a door-to-door salesperson (also called a direct agreement)

to pay in advance to join a fitness club or gym (also called a personal development contracts)

to buy a newly-built condo (under the Condominium Act)

Misrepresentation
Its illegal for the business or individual to give you false information about themselves or the product or service
they offer. Some examples of misrepresentation include:

claiming that they have licences, accreditation or certification when they dont

showing fake safety certification or accreditation for an item

stating that the product is a certain grade, style, model, or quality when it isnt

Delivery of goods
Under the Consumer Protection Act, when you order a product, it must be delivered within 30 days of the
promised delivery date or you can ask for a refund. However, if you choose to keep the item that was delivered
late, you lose your right to get a refund for it.

Your rights under a contract

When you sign a contract with a business or individual to buy or lease products or services, the Consumer
Protection Act protects you from unfair practices.
But always remember to read and understand the terms and conditions before signing.