Presumptions in Interpretation of Statutes

Interpretation of the statutes are dependent on a number of presumptions. These presumptions are very crucial for correct interpretation of the enactments for administration of justice. The presumptions are discussed below.

1. Presumption of validity

Unless and otherwise proved invalid, the existing laws are presumed to be valid. It is presumed that the laws enacted by the legislature are constitutionally valid. So when interpreting the law, if two view points arises, one which goes by the constitution will be accepted.

In the case of Govindlalji v. State of Rajasthan, the phrase  “affairs of the temple” in that provision was tightly interpreted to maintain the constitutional validity of the “Rajasthan Nathdwara Temple Act”.

2. Territorial operation presumption

Unless mentioned explicitly, application of the acts are restricted withing the territory of the country which has passed it. In Ajay Agarwal v. Union of India, the SC declared that the crime of criminal conspiracy is regarded as a continuing offence. Therefore, it makes little difference if the activities that make up the conspiracy are carried out in Chandigarh or Dubai.

3. Presumption of court's jurisdiction 

Interpretations should not arbitrarily revoke a court’s jurisdiction unless the statute expressly and specifically intends it to do so. The main purpose of this presumption is to preserve the accessibility of the justice system to one and all who seeks it. In the case of the Provincial Government of Madras v. J.S. Bassappa the SC ruled that the exclusion of civil court jurisdiction should not be loosely interpreted.

4. Assumption against retrospective operation of law

Unless mentioned specifically, statutes are intended to have an impact on future acts or events rather than retroactively affecting past circumstances. This presumption was first applied in the case of I.C. Golak Nath v. State of Punjab (A.I.R. 1967 SC 1643). 

CCSU LLB / BA-LLB Question References

Q. Discuss the existence of presumptions in the field of interpretations of statutes. [BA-LLB - 20 marks - 2022, 2021]

Q. Write about presumption against ousting the Jurisdiction of Courts. [BA-LLB - 10 marks - 2019]

Welfare Legislation - Interpretation of Statutes

Legislations created for socio-economic welfare of the general populace in society are called welfare legislation.

When interpreting statutes related to welfare legislation, courts must take a balanced approach with the objective of ensuring the legislation serves its intended purpose of promoting the public good while also respecting the rights and freedoms of individuals.

CCSU LLB / BA-LLB Question References

Q. Welfare legislation [BA-LLB - 4 marks - 2022]

Ouster of Jurisdiction

Ouster of Jurisdiction

Ouster of jurisdiction means the exclusion of judicial proceedings in respect of any dispute. It can be expressed or implied in a civil court. For example, an ouster clause in a contract is an agreement that excludes the jurisdiction of the courts. This is considered to be against public policy. 

When faced with an ouster clause, courts have three options:

(i) Acceptance

(ii) A constitutional parry: This involves subjecting the clause to strict scrutiny and only giving it effect if Parliament uses clear, firm, and explicit language

(iii) A constitutional lunge 

The party raising the plea has the burden of proving the ouster of the civil court's jurisdiction. The Supreme Court has ruled that ouster of jurisdiction cannot have a retrospective effect to annul a decree that was validly passed by the civil court. 

CCSU LLB / BA-LLB Question References

Q. Ouster of Jurisdiction [BA-LLB - 4 marks - 2022]

Honesty is the best policy

Honesty is the best policy

The popular English proverb “Honesty is the best policy” means under any circumstances, one should try to be honest. Being dishonest, telling lies is very easy. To be honest and truthful, it takes courage and character. It is easy to earn quick money by dishonest means. The unethical ways are alluring, by using unethical practices one can achieve success easily and quickly. But one should understand that these quick money and quick success are like quicksand, they can take back everything as quickly. On the other hand, an honest person may face difficulties in day to day life, but at the end of the day he sleeps peacefully. He has nothing to worry about and nothing to hide from anyone. He doesn’t have to cook up stories to cover up misdeeds. Ethical and honest ways may seem long and tough paths to follow, but in the long run these are the ways that sustain. An honest person never gets distracted even in the most provoking situations. Good policies are those which sustain the passage of time. Honesty is the best policy because it lasts forever.

Where there is a Will there is a Way

Where there is a will there is a way

Will power is the greatest power. As the popular proverb goes, "where there is a will there is a way”, a strong will power can turn the impossible to possible. Doors are never shut for a determined mind. A strong determination to achieve the desired goal is the foundation stone for success. Will power gives the impetus to a solid beginning. A solid beginning is half the work done! As one moves on with strong determination, nature creates the ways for him or her. A determined person never finds himself in a situation where all the roads are closed. There are ample examples around us where people with difficulties and disabilities have achieved success which were seemingly impossible. Arunima Sinha who lost both her legs in a train mishap, has scaled Mount Everest to become the world's first female amputee to achieve the feat. For an average Indian village girl, losing the legs means end of everything. The parents and relatives start pitying about the future of such girl. Arunima Sinha, with her stron determination has proved to the world that where there is a will there is, indeed,  a way!

With Mirth and Laughter let Old Wrinkles Come

Q. Write a paragraph, not exceeding 200 words on any one of the following topics: 

With mirth and laughter let old wrinkles come [2023 - BA LLB 4th semester]

With mirth and laughter let old wrinkles come

"With mirth and laughter let old wrinkles come" is quoted from "The Merchant of Venice", one of the greatest works of William Shakespeare. The quoted line talks about accepting the ageing process gracefully. Aging is a process that cannot be overcome or bypassed. Whether man or woman, rich or poor, happy or sad, human or animal, the process of getting old spares none. Forget about the living entities, even the non-living things like the rocks and stones have a life. This is an inevitable process. An infant grows up to become a boy, further grows up to become a man and then with age he becomes an old man with grayed hair and wrinkles on the face. No one could save themselves from eternal process. The quoted statement suggests to accept this process with amusement and laughter. There is no point in worrying about something that cannot be avoided. The worries will accelerate the process further instead of any solution. An wise person will never worry about these natural processes and will concentrate on garnering maximum pleasure out of the precious human life. 

An Idle Brain is the Devil’s Workshop

 Q. Write a paragraph not exceeding 200 words on the given topic:

An Idle Brain is the Devil's Workshop [2022. 2023 - BA LLB 4th semester]

An Idle Brain is the Devil’s Workshop

The popular proverb "An idle brain is the devil’s workshop" is often used to remind us not to sit idle. The human brain can not remain idle even for a fraction of a second.It is so stubborn and flickering that it is very difficult to control the movement of the brain even when it is engaged in some activity. If it is left idle, it biomes like an unbridled horse, which is next to impossible to control. General tendency of the human mind is to move downwards. It is easy to fall for the catchy things which have negative impacts. For example, it is very easy for a college student to start consuming alcohol and be addicted within no time. It takes lots of courage and character to remain an ideal student. It can be observed that the people who have no purpose in life have all the addictions and bad habits. If the psychology of the criminals are studied, it would be found that they were swayed away by their uncontrolled mind. The Gita says that an uncontrolled mind is most dangerous enemy and a controlled mind is the best friend. So it is important to keep the mind engaged in productive activities so that it remains within control.

Gilded Tombs do Worms Enfold

Q. Write a paragraph not exceeding 200 words on the given topic:

All that glitter is not gold [2022. 2024 - BA LLB 4th semester]

Gilded Tombs do Worms Enfold

The popular adage "Gilded tombs do worms enfold", was coined by William Shakespeare in his play "The Merchant of Venice". The phrase means all that glitters is not gold. Everything may not be as it appears to be. Gold is a shining, glittering metal. A tomb covered with gold plates would look wonderful outside. But being a tomb, there is a fare chance of worms being present there. The outward looks are often deceptive. There are ample examples where people get carried away by the outward look of an object. We have experience of purchasing a very good looking expensive garment which gets faded after the first wash!  There is no dearth of people having an experience of buying vegetables that looked garden fresh, and were actually rotten inside. The phrase is equally applicable to human beings as well. A person who looks very gentle at the first meeting may come out to be an arrogant brute and a person who looks like a villain, is actually a gentleman par excellence. It is important not to make judgment based on the outward looks of a person or thing.

The Devil can Cite Scriptures for his Purpose

Q. Write a paragraph not exceeding 200 words on the given topic:

The devil can cite scripture for his purpose [2024 - BA LLB 4th semester]

The devil can cite scripture for his purpose

The line quoted from the play 'Merchant of Venice' by William Shakespeare is equally pertinent in today's world. The use of the scriptures for personal motivated purposes is rampant nowadays. People of all walks of life, be it service, business, politics, philosophy or religion, use the scriptural quotations as per their own whims and fancy to meet their personal end goals. The meaning of the verses from the scriptures are twisted and turned to fit their own requirements. The businessmen use it to justify their manipulations and adulterations, the lawyers use it to win a case by hook or crook. The philosophers use the scriptural questions to prove their points, however unjust that may be. The most horrifying amongst these is, the pseudo-religious pretenders, dressed like monks, use the scriptural injunctions to justify their position as a godman. Such rampant use of scriptures by the devils of current generations is causing a degradation of the morale standard of the society. General populace having good faith on the religion and religious scriptures get easily swayed by these pretenders which may cause havoc on their individual lives and the society as whole.

All that Glitters is not Gold

Q. Write a paragraph not exceeding 200 words on the given topic:

All that glitter is not gold [2022. 2024 - BA LLB 4th semester]

All that glitter is not gold

The popular adage "All that glitter is not gold", was first used by William Shakespeare in his play "The Merchant of Venice". This means that everything may not be as it appears to be. Gold is a shining, glittering metal. One can identify gold by the very first look. But this does not mean anything and everything that is shining like gold is actually gold. The outward looks are often deceptive. There are ample examples where people get carried away by the outward look of an object. We have experience of purchasing a very good looking expensive garment which gets faded after the first wash!  There is no dearth of people having an experience of buying vegetables that looked garden fresh, and were actually rotten inside. The phrase is equally applicable to human beings as well. A person who looks very gentle at the first meeting may come out to be an arrogant brute and a person who looks like a villain, is actually a gentleman par excellence. It is important not to make judgment based on the outward looks of a person or thing.

Q. What is the doctrine of 'Separation of Power'? How far is it followed in the constitution of India? [20 marks - 2015]
Q.  Explain the meaning of 'Separation of Power'. [4 marks - 2016]
Q. The doctrine of separation of power [4 marks - 2017]
Q. What do you mean by Doctrine of Separation of Power? Discuss. [20 marks - 2021]
Q. What do you mean by Doctrine of 'Separation of Powers'. Discuss its importance in the context of Administrative Law.  [20 marks - 2022]
Q. Doctrine of separation of powers speaks about the division of the legislative, executive and judicial functional of government among separate. Discuss this doctrine with the help of decided cases. How this doctrine is implicit in our constitution. Discuss. [20 marks - 2023]

Separation of Power

Meaning

The doctrine of separation of powers means that the three organs of the government, i.e., the executive, legislature and judiciary are separated and distinct. They cannot exercise the powers vested on other departments. These organs are independent of one another and do not encroach upon the authority given to other organs.

Importance of Doctrine of Separation of Power

Concentration of power in one branch of the government is detrimental to the very purpose of democracy. Concentration of power gives rise to maladministration, corruption, nepotism and abuse of power. The doctrine of Separation of Powers keep the democracy alive by ensuring that:

(i) There is no autocracy in the system

(ii) Individual liberty is safeguard

(iii) Increased efficiency in administration

(iv) Independence of judiciary is maintained 

(v) The constitution is protected

Separation of Power in the Constitution of India

The doctrine of separation of powers implicit in the Constitution of India. It is and integral part of the basic structure of the Constitution. Though, the Constitution does not explicitly mention this doctrine, separation of power is suggested through various articles of the Constitution. Prominent of those are discussed below:

Article 50: Under the Directive Principles of State Policy, it is suggested to separate the judiciary form the legislature.

Article 123: The President, being the executive head of the country, is empowered to exercise legislative powers (Promulgate ordinances) in certain conditions.

Articles 121 and 211: The legislatures have not authority to discuss the conduct of a  the Supreme Court or High Court judge except incase of impeachment.

Article 361: The President and Governors enjoy immunity from court proceedings.

Checks and balances to protect the basic structure of the constitution

The judiciary has the power of judicial review over the actions of the executive and the legislature.

The judiciary has the power to strike down any law passed by the legislature if it is unconstitutional or arbitrary as per Article 13 (if it violates Fundamental Rights).

It can also declare unconstitutional executive actions as void.

The legislature also reviews the functioning of the executive.

Although the judiciary is independent, the judges are appointed by the executive.

The legislature can also alter the basis of the judgment while adhering to the constitutional limitation.

Checks and balances ensure that no one organ becomes all-too powerful. The Constitution guarantees that the discretionary power bestowed on any one organ is within the democratic principle

Leading Cases on the Doctrine of Separation of Power

Kesavananda Bharati Case (1973): In this case, the SC held that the amending power of the Parliament is subject to the basic features of the Constitution. So, any amendment violating the basic features will be declared unconstitutional.

Swaran Singh Case (1998): In this case, the SC held the UP Governor’s pardon of a convict unconstitutional.

Ram Jawaya Kapoor V State of Punjab

Indira Nehru Gandhi V Raj Narain

Contracts of Guarantee and Indemnity

Q. Define contract of Indemnity and explain its essentials fully. Distinguish between a contract of Indemnity and contract of guarantee. [20 marks - 2015]

Q. Define continuing guarantee [ 4 marks - 2015]

Q. Discuss liabilities and rights of a surety in contract of Guarantee. Would the liability be differ if there are more than one sureties? [20 marks - 2016]

Q. Define Continuing Guarantee [4 marks - 2017]

Q. What are the essential elements of guarantee? What is the difference between indemnity and guarantee? [20 marks - 2022]

Contracts of Guarantee and Indemnity

The contract of indemnity and the contract guarantee are the special contracts under the Indian Contract Act, 1872. Both the contracts are for providing compensation to the creditor for the failure of a third party to perform their obligation.

Contract of Indemnity

Section 124 of the Indian Contract Act, 1872 defines a contract of indemnity as a contract wherein one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person.

Essentials in the Contract of Indemnity

(1) Valid contract: The contract must be valid as per the Indian Contract Act, 1872.

(ii) Protection of loss: The contract should be for protection of loss.

(iii) Two parties: There should be two parties in the indemnity contract. The indemnifier and the holder.

(iv) Express or implied: The indemnity contract can express or implied.

Express Indemnity:

This is a type of written indemnity, where all the terms and conditions of the indemnity are mentioned specifically in the contract.

Implied Indemnity:

The indemnity where the obligation arises from the facts and the conduct of the parties involved. For example, master servant relationship. There is no written contract in this type of indemnity.

Rights of an Indemnity Holder

A per section 125 of Indian contract Act, 1872 the promisee in a contract of indemnity is entitled to recover from the promisor:

(i) All damages which he may be compelled to pay in any suit related to this contract.

(ii) All costs which he may be compelled to pay in any such suit.

(iii) All sums which he may have paid under the terms of any compromise of any such suit.

Rights of the Indemnifier

After the indemnity holder is paid for the damage incurred, the compensator shall have all the rights to all the methods and services which can save the compensator from the damage.

Case References for Contract of Indemnity

Gajanan Moreshwar vs. Moreshwar Madan, (1942)

Lala Shanti Swarup vs Munshi Singh & Others, (1967)

Contract of Guarantee

Section 126 of the Indian Contract Act, 1872 states that a "contract of guarantee" is a contract to perform the promise, or discharge the liability, of a third person in case of his default.

Essentials of a Contract of Guarantee

(i) Surety: The person providing guarantee is called the surety.

(ii) Principal debtor: The person for whose default the guarantee is given is the principal debtor.

(iii) Creditor: The person to whom the guarantee is given called the creditor.

(iv) Guarantee: A written or verbal guarantee.

Example of a Contract of Guarantee

Mr. X takes a loan of Rs. 5 lakhs from the ABC Bank. Mr. Y promises to pay the loan amount to UCO Bank if Mr. X fails to repay. This is a contract of guarantee and Mr X is Principal debtor, ABC Bank is creditor and Mr. Y is surety.

Liability of Surety

(i) Section 128 of the Indian Contracts Act, 1872 states the liability of the surety is same as the principal debtor, unless it is otherwise mentioned in the contract.

(ii) The surety can be sued directly by the creditor in case of default by the principal debtor.

Rights of Surety

(1) Rights against the principal debtor

(i) Right to give notice.

(ii) Rights of sub-rogation.

(iii) Right of indemnity.

(iv) Right to get securities.

(v) Right to ask for relief.

(2) Rights against the creditor

(i) Right to get securities.

(ii) Right to ask for set-off.

(iii) Rights of sub-rogation.

(iv) Right to advice to sue principal debtor.

(v) Right to insist on termination of services.

C. Rights against co-sureties

(i) Right to ask for contribution from the co-sureties.

(ii) Right to claim share in securities.

Continuing Guarantee

A form of guarantee that extends to a series of transactions is a continuing guarantee. A continuing guarantee extends to all transactions that the principal debtor enters into before the surety revokes it.

A continuing guarantee for future transactions may be withdrawn at any time by notice to the creditors. However, the responsibility of a surety for transactions completed prior to such revocation of guarantee is not diminished.

Difference between Contract of Indemnity and Contract of Guarantee

Contract of Indemnity	Contract of Guarantee
There are two parties: the indemnifier and the indemnity holder.	There are three parties: the principal debtor, the creditor, and the surety.
There is only one contract between the indemnifier and the indemnity holder.	There are three contracts between: (i) the principal debtor and the creditor. (ii) the creditor and surety (iii) the principal debtor and surety
The liability of the indemnifier is primary.	The liability of the surety is a secondary. His obligation to pay arises only when the principal debtor defaults.
The liability of an indemnifier is not conditional.	Liability of surety is conditional on the default of the principal debtor.
Once the indemnifier indemnifies the indemnity holder, he cannot recover that amount from anybody else.	After the surety has made the payment, he becomes the creditor and can recover the sums paid by him from the principal debtor.

Breach of Contract - Remedies for Breach of Contract

Q. What remedies are available to seller and buyer in case of breach of contract? Discuss. [10 marks - 2022]

Breach of Contract

When any of the parties to a valid contract fails to perform it's obligations as per the agreed upon terms and conditions, this is called breach of contract. A breach of contract is a violation of any of the agreed-upon terms and conditions of a binding contract. The following three points are essential for a breach of contract:

• A valid contract,
• Performance by one party, and
• Damages suffered by the performing party.

Remedies for Breach of Contract

1. Cancellation of Contract

When one of the parties to a contract does not fulfil his obligations, then the other party can cancel the contract. As per section 65 of the Indian Contract Act, the cancelling party must restore any benefits received. Section 75 entitles the cancelling party to receive damages.

2. Sue for Damages

Section 73 states that the party who has suffered for the breach of contract, can claim compensation for loss or damages caused to them in the normal course of business.

3. Sue for Specific Performance

The breaching party may be sued for performing the duties as per the contract. In certain cases, the courts may insist that the party carry out the agreement.

For example, A agrees to sell a piece of land to B. But later on he refuses to sell. The courts can order A to perform his duties under the contract and sell the land to B.

4. Injunction

An injunction is a court order restraining a person from doing a particular act.

5. Quantum Meruit

Quantum meruit in Latin mean “as much is earned”. At times when one party of the contract is prevented from finishing his performance of the contract by the other party, he can claim quantum meruit.

Bilateral Contract

Q. Define Bilateral Contract [4 marks - 2022]

Bilateral Contract

Sections 51–57 of the Indian Contract Act, 1872 covers bilateral agreements in detail. Bilateral contracts are agreements between two or more parties that obligate each party to perform certain actions or provide something of value to the other. They are often used in business transactions where both parties have equal bargaining power, such as the sale of goods or services or the purchase of land.

Examples of Bilateral Contract: any sales agreement, lease, or employment contract.

Doctrine of Caveat Emptor : Meaning, Definition, Exceptions and Relevance

Q. “Doctrine of Caveat Emptor has lost much of his significance in modern times.” Discuss. [20 marks - 2015]

Q. “Doctrine of caveat emptor has lost much of his significance in the modern times”. Discuss. [20 marks - 2016]

Q. The rule of “caveat emptor” has become almost the rule of “caveat venditor”. Discuss. [20 marks - 2017]

Q. What is the principle of 'Caveat Emptor'? What are its exceptions? [10 marks - 2022]

The Doctrine of Caveat Emptor

Caveat Emptor is a Latin term which means buyer be aware. The Doctrine of Caveat Emptor means that the responsibility lies on the buyer of goods and he must perform due diligence before the purchase of the goods. 

Section 16 of the Sale of Goods Act, defines Caveat Emptor as ‘“there is no implied warranty or condition as to the quality or the fitness for any particular purpose of goods supplied under such a contract of sale“

For example, a seller sells certain goods to a buyer. If the buyer later discovers a defect in the goods that could have been detected earlier by him, the seller cannot be sued.

Exceptions to the Doctrine of Caveat Emptor

1. Fitness of the Product for the Buyer’s Purpose of Purchase- Section 16 (1)

If the buyer purchases some item in good faith after explaining the purpose behind the purchase, it relieves the buyer from the responsibility. In this case, it becomes the duty of the seller to supply the right goods to the buyer. 

For example, A purchase mango from B explaining him that the mango is required to make ice cream the next day. The seller says that this will ripen the next day and will be fit for making ice cream. The seller will be responsible if the mangoes  do not ripen the next day.

2. Sale of Goods Under the Trade Name - Proviso to Section 16(1) 

If the buyer purchases a branded product or a product sold under a trading name, then he is assured of the quality that is associated with that brand name. In this case the Caveat Emptor will not be applicable.

3. Merchantable Quality of Goods- Section 16(2)

As per Section 16(2), if the goods are sold under the pretext that they correspond to a particular description, then there is an implied warranty that the goods must conform to the mercantile quality.

In McKenzie v. Nagendra Nath (1919), the seller was asked to pay for the repair of the defective car.

4. Examination by buyer - Proviso to S. 16(2)

The proviso to S. 16(2) provides that “if upon examination of the goods to be purchased, the defects ought to have been revealed, then no implied condition as regards to the defect will exist.” 

4. Conditions implied by trade usage - Section 16(3)

Section 16(3) of the Sale of Goods Act states:

“An implied condition or warranty as to the quality or fitness for any particular purpose may be annexed by the usage of trade.”

In the case of Peter Darlington Partners Ltd v Gosho Co Ltd (1964), it was held that the buyer has the right to reject the goods or to claim damages in case of any defect. 

Significance of Doctrine of Caveat Emptor in modern times

Doctrine of Caveat Emptor has lost much of his significance in modern times due to the following reasons.

1. Competition: In this age of stiff competition, customer satisfaction has taken priority over everything else. Now a days the contract of sale itself guarantees replacement or refund of the defective goods. Thus, the exceptions carved out under Section 16 lose their relevance, if not become completely obsolete.

2. Consumer protection: The doctrine of caveat emptor has also lost its relevance due to the enactment of the Consumer Protection Act, 2019. The Consumer Protection Act clearly embraces the doctrine of caveat venditor. Section 84 of the Consumer Protection imposes a liability on the manufacturer for any defect or quality issues.

Section 86 of the Act provides that even sellers who have not manufactured the product can be held liable for a defective product in the certain conditions.

Conclusion

Thus, the various provisions of the Consumer Protection Act, by imposing the liability on the seller or the manufacturer for the defective product, have adopted the doctrine of caveat venditor. This also signals the declining relevance of the doctrine of caveat emptor. 

In Smt.Rekha Sahu vs The Uco Bank (2013), the Allahabad High Court held that the Indian jurisprudence has witnessed a shift from the doctrine of caveat emptor to the doctrine of caveat venditor. Thus, the seller was liable to pay the dues. 

Bailment - Definition, Distinctions with Pledge and Sale of Goods

Q. Explain the various kinds of Bailment. [10 marks - 2015]

Q. Distinguish ‘bailment’ from ‘pledge’ and ‘sale of goods’. [10 marks - 2016]

Q. Distinguish Pledge from Bailment and Mortgage. [10 marks - 2017]

Q. Write any two differences between Sale & Bailment. [4 marks - 2018]

Q. What are the essential elements of Bailment? Differentiate between ‘Bailment’ and ‘Agency’. [10 marks - 2018]

Q. Define Bailment [4 marks - 2022]

Q. Explain various kinds of bailment [10 marks - 2021 - BA LLB]

Q. Explain bailment and discuss its essential requirements [20 marks - 2021 - BA LLB]

Bailment

Bailment is defined in the Indian Contract Act, 1872 under Section 148 as “A Bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them”.

Types of Bailment

There are three different types of bailments: those that benefit both parties, those that benefit only the bailor, and those that benefit only the bailee. 

1. Bailments That Benefit Both Bailor and Bailee

These are standard service agreement bailment. For example, a car parking service provider, the bailee gets paid for keeping the car and bailor the car owner has to pay the parking charges. The bailee has liability for the damages.

2. Bailments That Benefit Only the Bailor

These are a kind of free bailment. For example, free valet parking service. In this case, bailee the service provider doesn’t receive compensation for parking the car but can be held liable for damages.

3. Bailments That Benefit Only the Bailee

These are constructive bailments. For example, Mr. X rents a book from a library. Here Mr. X is the bailee while the library is the bailor, which gets no benefit from the relationship. The library however, expect the book to be returned at the end of the rental period.

In this type of bailout, the bailee faces liability for basically any damage to the bailed item. This is the highest standard of care required out of the three categories.

Essential Element of Contract of Bailment

1. A Valid Contract

A contract of bailment is a special type of Contract which include offer and acceptance, lawful consideration, the parties' capacity and legal intentions. There are two types of bailment based on consideration:

(a) bailment without consideration - Gratuitous Bailment

(b) bailment with consideration - Non - Gratuitous Bailment

2. Delivery of Possession

Delivery of goods in case of a bailment contract can be actual and constructive. Actual delivery of goods means the bailor physically gives goods to the position of the bailee. In the case of constructive delivery of goods, goods are not physically yielded, but a few actions imply that the bailee has been given custody of the goods.

3. Delivery at the end of Contract

After creating a contract, the goods are relaid from the bailor to the bailee. The Contract must have details about the transfer and the return of the goods. Contract of bailment can be expressly signed by parties or told by the parties.

Difference between Bailment and Sale of Goods

Contract of sale	Contract of bailment
Transfer of ownership and possession.	Transfer of possession
The buyer has complete control over the use of the purchased property	Bailee needs to use the property according to the instructions given by the bailer.
The buyer pays the price for the goods	The goods are required to return to the bailer after the specified period after accomplishing the purpose of bailment.
The buyer holds the ownership of the property until he sells the property to another person.	The bailer is not entitled to use the bailed property until the purpose of bailment is achieved.

Difference between Bailment and Pledge

Contract Bailment	Contract of Pledge
A Bailment is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. .	The bailment of goods as security for payment of a debt or performance of a promise is called a Pledge. The Bailor in this is called the Pawnor and the Bailee is called Pawnee.
The bailee is required to return the property in the same condition and the purpose is typically for safekeeping, storage, or a specific use of the property.	Securing the payment of a debt is the aim of a pledge; ie., security against a debt.
If there is a bailment, the amount of compensation is often negotiated separately. It’s possible that the bailee won’t get paid for their labor	Until the obligation is settled, the pawnee is permitted to keep the pledged goods. The pawnee may sell the pledged property to recover the loan if the debtor defaults.
Unless otherwise agreed upon, the bailee is usually expected to return the item in the same condition as it was received.	After the debt is paid back, the pawnor receives their goods back. The pawnee may sell the property to pay off the loan if it is not paid back.
The property may be used by the bailee for the specified purpose but, any usage that goes beyond the parameters of the agreement may need the bailor’s consent.	Unless the pawnor specifically grants it or it’s required for the property’s safety, the pawnee is not entitled to use the pledged assets.
The bailment may end by mutual consent, the accomplishment of the goal, or the passage of the agreed time frame.	Once the obligation is repaid, the commitment is cancelled. The pawnee may sell the pledged property and end the pledge if the debtor is unable to make payments.
Bailment’s obligations and rights only apply to the bailor and the bailee.	In the event of the pawnor’s default, the pawnee’s rights and interests may be claimed against other parties.

Distinction between Bailment and Agency

Contract of Bailment	Agency
Voluntarily Change of possession from one person to another is called contract of bailment.	‘Agency’ is the legal relationship between an agent and Principal; to bring the principal into legal relationship with the third party.
In bailment, the Bailee does not represent the Bailor. He does not derive any authority from the Bailor.	The agent represents his principal and derives certain power from his principal.
In Bailment, A Bailee cannot sell the property  under bailment	In Agency, an agent can sell the property.
A Bailee cannot transfer the ownership of the property	An agent can transfer the ownership of the property

Partnership - Indian Partnership Act 1932

Partnership Definition

According to section 4 of the Indian Partnership Act, 1932, a partnership is an agreement between two or more people to share the profits of a business. The people who form a partnership are called partners, and the business is called a firm.

Can Partnership be formed from Status?

According to Section 5 of the Indian Partnership Act 1932, the relation of partnership arises from contract and not from status. Thus, the members of a Hindu Joint Family carrying on a business, or the co-owners of a business are not ‘partners’ because HUF and co-ownership are created by operation of law and not by contract. The agreement of partnership may be expressed or implied.

Partnership can be formed only for the purpose of carrying on some business. Section 2(b) of Partnership Act says that the term ‘business’ includes every trade, occupation or profession. 

Minor as a Partner in a Partnership Firm

Section 30 of the Indian Partnership Act 1932 states that

(1) A minor may not be a partner in a firm, but, with the consent of all the partners for the time being, he may be admitted to the benefits of partnership.

Rights and liabilities of Minor in a Partnership Firm

(2)  The minor has right to share of the profit and property of the firm as per the agreement. The minor partner also has access to and inspect and copy any of the accounts of the firm.

(3) The minor partner's share is liable for the acts of the firm, but the minor is not personally liable for any such act.

(4) Such minor may not sue the partners for an account or payment of his share of the property or profits of the firm.

(5) Upon attaining majority the partner may choose to become a partner or may opt out of the partnership firm with a written notice within 6 months of attaining majority.

Effect of non registration of a partnership firm

Section 69 of the Indian Partnership Act, 1932 offers a detailed explanation of the consequences of not opting for firm registration. These are:

(1) An unregistered firm cannot bring any suit in a civil court against any third party for breach of contract. Further, the person filing the suit on behalf of the firm should be in the register of the firm as a partner.

(2) An unregistered firm or its partners cannot set-off an action having a value equal to or greater than Rs. 100 brought in by any third party.

(3) No partner can bring legal action against other partners or the firm if the firm is not registered.

(4) A third party can sue the firm even if it is not registered as per the act.

Types (Modes) of Partnerships 

A partnership may be of different types depending on the state where the business operates. Few most common types of partnerships are discussed below:

General Partnership

A partnership firm comprising of two or more partners having equal rights and liabilities, is called general partnership. All partners can participate in management activities, decision making, and have the right to control the business. Similarly, profits, debts, and liabilities are equally shared and divided equally. 

Limited Partnership

Limited partnership is formed with both general and limited partners. The limited partner has limited share of profit and liabilities. Limited partners have limited control over the business (limited to his investment). They are not associated with the day to day operations of the firm. In most of the cases, the limited partners only invest and take a profit share. They do not have any interest in participating in management or decision making. 

Different modes of reconstitution of Partnership Firm

Limited Liability Partnership

A limited liability partnership (LLP) is a flexible legal entity where every partner has a limited personal liability for the debts or claims of the partnership. Each partner is guarded against other partners legal and financial mistakes. A limited liability partnership is almost similar to a Limited Liability Company (LLC) but different from a limited partnership or a general partnership. 

Partnership at Will

Partnership at Will can be defined as when there is no clause mentioned about the expiration of a partnership firm. Under section 7 of the Indian Partnership Act 1932, the two conditions that have to be fulfilled by a firm to become a Partnership at Will are:

(i) The partnership agreement should not have any fixed expiration date.

(ii) No particular determination of the partnership should be mentioned.  

Difference between Partnership and Company

Partnership Firm	Company
Partnership Firm is a mutual agreement between two or more persons to run the business and share profit and loss mutually.	Company is an association of persons with a common objective of providing goods and services to customers.
A partnership is formed as per Indian Partnership Act, 1932	A company is formed under Indian Companies Act, 2013
A minimum of 2 members are required for a partnership firm	Minimum 7 members for public limited,  Minimum 2 members  for  Private Limited,
There can be a maximum of 100 members	Maximum 200 members for a Private Limited, unlimited members for a Public Limited
Partnership Deed required for the creation of a partnership firm	Memorandum of Association and Article of Association is mandatory for incorporating a company
There is no minimum amount required for form a partnership.	1 Lakh minimum for a Pvt Ltd and 5 lakh in case of Public Company
No audit required	Mandatory audit is required every year
Consent required from all partners before transferring their share to others.	Can be transferred any time as desired by any shareholder

Dissolution of a Partnership Firm

Section 39 of Indian Partnership Act, 1932 provides methods of dissolution of partnership among all the partners of a firm. Dissolution involves winding up of business, disposal of assets and paying off the liabilities and distribution of any surplus or loss by the partners of the firm. As per the Act, a partnership firm may be dissolved in the following ways:

(1) Dissolution by Agreement

A firm may be dissolved with:

a) the consent of all the partners, or

b) the contract between the partners

(2) Compulsory Dissolution

A firm may be dissolved by:

a) the adjudication of all the partners or of all partners but one as insolvent

b) happening of an event or change in government policies that make the business unlawful.

(3) Dissolution on the happening of Certain Contingencies

Subject to the contract between the partners, a firm is dissolved

a) if formed for a specific period then on the expiry of the period

b) if formed for a specific purpose then on completion of the purpose

c) on the death of partner/partners

d) on insolvency of a partner/partners

(4) Dissolution by Notice

If partnership is at will then the partnership firm is dissolved if any partner giving notice in writing to all the other partners expressing his/her intention to dissolve the firm.

(5) Dissolution by Court

The court may order to dissolve a partnership firm when:

a) a partner becomes insane or lunatic.

b) a partner becomes permanently incapable of performing the duties.

c) a partner is guilty of misconduct and affects the business activities.

d) a partner repeatedly breaks the terms of agreement .

e) a partner transfers his interest to a third party without the consent of other partners.

f) a business persistently incurs losses.

Rights of Outgoing Partner

A partner who leaves a running partnership firm is an outgoing partner. Rights of such outgoing partner is discussed below:

(1) Right to Carry on a Competing Business

Section 36 (1) of the Indian Partnership Act, 1932 (Partnership law), imposes certain restrictions but allows an outgoing partner to carry on a business and advertise it, which competes with the partnership firm. However, it restricts him from:

1. Using the name of the partnership firm
2. Representing himself as a partner of the firm
3. Soliciting the custom of persons who were dealing with the fi­rm before he ceased to be a partner.

(2) Right to Share Subsequent Profits

According to Section 37, of the Partnership Law, if a member of the firm dies or otherwise ceases to be a partner of the firm, and the remaining partners carry on the business without any final settlement of accounts between them and the outgoing partner, then the outgoing partner or his estate is entitled to share of the profits made by the firm since he ceased to be a partner.

The surviving partners also have an option of purchasing the interest of the deceased or outgoing partner. If the surviving partners choose to purchase the interest, then the outgoing partner is not entitled to any further share in profits of the firm.

Q. Can partnership be created from status? [4 marks - 2015]

Q. Partnership is created from a contract and not from status.” Discuss. [10 marks - 2015]

Q. Can a Minor be admitted in Partnership firm? If yes, explain his rights and duties. [20 marks - 2015]

Q. Distinguish between a partnership and a company.  [4 marks - 2016]

Q. Write down the effect of non-registration of a partnership firm. [10 marks - 2016]

Q. Under what circumstances a minor can be admitted in a partnership business? Discuss his rights and liabilities. [20 marks - 2016]

Q. Partnership at will. [4 marks - 2017]

Q. “Partnership is created by contract not by status”. Discuss. [10 marks - 2017]

Q. Define partnership [4 marks - 2022]

Q. Limited Liability Partnership. [4 marks - 2022]

Q. Elaborate the right of outgoing partner. [10 marks - 2022]

Q. What are various modes of dissolution of partnership firm? What are the consequences of dissolution? [20 marks - 2022]

Q. What are the effect of non-registration of a firm? [2022 - 4 marks - BA LLB]

Q. Define Partnership. Discuss different modes for determining existence of a partnership. [2022- 20 marks - BA LLB]