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2a) Void Agreement

A void contract cannot be enforced by law. Void contracts are different


from voidable contracts, which are contracts that may be (but not necessarily
will be) nullified. However, when a contract is being written and signed, there is
no automatic mechanism available in every situation that can be utilized to
detect the validity or enforceability of that contract. Practically, a contract can be
declared to be void by a court of law. So the main question is that under what
conditions can a contract be deemed as void?
An agreement may be void if any of the following:
 Made by incompetent parties (e.g., under the age of consent, incapacitated)
 Has a material bilateral mistake
 Has unlawful consideration (e.g., promise of sex)
 Concerns an unlawful object (e.g., heroin)
 Has no consideration on one side
 Restricts a person from marrying or remarrying
 Restricts trade
 Restricts legal proceedings
 Has material uncertain terms
 Incorporates a wager, gamble, or bet
 Contingent upon the happening of an impossible event
 Requires the performance of impossible acts

BASIS FOR
SALE AGREEMENT TO SELL
COMPARISON

Meaning When in a contract of sale, the When in a contract of sale the parties
exchange of goods for money to contract agree to exchange the
consideration takes place goods for a price at a future specified
immediately, it is known as date is known as an Agreement to Sell.
Sale.

Nature Absolute Conditional

Type of Contract Executed Contract Executory Contract

Transfer of risk Yes No

Title In sale, the title of goods In an agreement to sell, the title of


transfers to the buyer with the goods remains with the seller as there
BASIS FOR
SALE AGREEMENT TO SELL
COMPARISON

transfer of goods. is no transfer of goods.

Right to sell Buyer Seller

Consequences of Responsibility of buyer Responsibility of seller


subsequent loss or
damage to the goods

Tax VAT is charged at the time of No tax is levied.


sale.

Suit for breach of The buyer can claim damages Here the buyer has the right to claim
contract by the seller from the seller and proprietary damages only.
remedy from the party to
whom the goods are sold.

Right of unpaid seller Right to sue for the price. Right to sue for damages.

3a) Goods may be classified into


1. Existing goods: At the time of sales if the goods are physically in existence
and are in possession of the seller the goods are called ‘Existing Goods’.
Existing goods can be classified into ‘specific or unascertained.’
(a) Specific goods. Goods identified and agreed upon at the time of the making
of the contract of sale are called ‘specific goods’. It may be noted that in actual
practice the term ‘ascertained goods’ is used in the same sense as ‘specific
goods,’ For example, where A agrees to sell to B a particular radio bearing a
distinctive number, there is a contract of sale of specific or ascertained goods.
(b)Unascertained goods. The goods, which are not separately identified or
ascertained at the time of the making of the contract, are known as
‘unascertained goods.’ They are indicated or defined only by description. For
example, if A agrees to sell to B one bag of sugar out of the lot of one hundred
bags lying in his godown; it is a sale of unascertained goods because it is not
known which bag isto be delivered. As soon as a particular bag is separated
from the lot for delivery, it becomes ascertained or specific goods.
2. Future goods: Future goods are goods to be manufactured or produced or yet
to be acquired by seller. There cannot be present sale in respect future goods
because the property cannot pass.
3. Contingent Goods: Though a type of future goods, these are the goods the
acquisition of which by the seller depends upon a contingency, which may or
may not happen.
What are the Rights of Unpaid Seller
The seller who has not received price of goods sold or the seller who has got his
negotiable instrument dishonored will become Unpaid Seller. Sale of goods act,
1930 Section 45 to 55 read about the rights of Unpaid Seller. Those rights can
be classified into two groups. They are as follows.
Rights against Goods
Rights against Buyer
Rights of Unpaid Seller against Goods
When goods are in existence and title has not gone to buyer, Unpaid Seller can
exercise the rights against goods. These rights are categorized into three types.
They are as follows.
Right of lien: Right to retain goods by unpaid seller till amount is recovered is
called right of lien.
Right of stoppage in transit: Unpaid Seller has right to stop the goods in the
transit itself.
Right to re-sale: The unpaid seller can re-sell the goods for non-payment of
price by buyer. He can exercise this right when the goods are of perishable
nature while doing so it is beneficiary to the seller to give a notice to buyer with
regard to resale. If such notice is given seller can claim loss. If any on resale
from the buyer. On the other hand if there is profit on resale the former buyer
cannot claim that profit. If notice is not given the seller has to face adverse
consequence. If there is any loss on re-sale, that loss cannot be recovered from
buyer. But in case of profit, seller has responsibility to pay that amount of profit
to buyer.
What are the Rights of Unpaid Seller against Buyer
At times it becomes inevitable choice to exercise rights on buyer for non-
payment of price. The unpaid seller can file suits against the buyer as explained
below.
Right to sue for price: It is fundamental right of buyer to file a suit for recovery
of unpaid price. In the case of sale. Suit will be made for price balance, but not
for compensation.
Right to sue to interest: If the buyer makes unreasonable delay for making
payment, the seller has right to claim interest also.
Right to sue for compensation: When an agreement to sell is breached, the seller
can see only for compensation for the breach of Contract. Under such
circumstances he cannot sue for price.
Right to Sue for anticipatory contract: When an agreement to sell is breached by
buyer before date of performance. It is called anticipatory breach. Then also
seller can sue for compensation.

4b) In many respects, the duties of a partner are the same as those of an agent.
Loyalty and Good Faith: Each partner must act in good faith toward the other
partners and must not take any advantage over the other partners by
misrepresentation or concealment. A partner cannot promote a competing
business, and if he does so, he can be liable for any damages sustained by the
partnership.
Obedience: Partners must observe any limitations adopted by a majority of the
partners with regard to the ordinary details of the partnership business.
Reasonable Care: A partner must use reasonable care in transacting the
partner­ship’s business and is liable for any loss resulting from a failure to act
with reasonable care.
Information: A partner has the duty to inform the partnership of all matters
relevant to the partnership. For example, if one partner is going to buy out the
interest of another partner, this must be revealed to the partnership.
Management: Each partner has the right to take an equal part in transacting the
business of the partnership. It is irrelevant that one partner contributed more
than another financially or that one contributed only services when the
partnership was formed.
Inspection of Books: All partners are equally entitled to inspect the books of the
partnership.
Share of Profits: Each partner is entitled to a share of the profits. The partners
may provide that profits shall be shared in unequal propor-tions.
Compensation: In the absence of an agreement to the contrary, a partner is not
entitled to compensation for services performed for the partner-ship.
Repayment of Loans: A partner is entitled to reimbursement of money
advanced to the partnership, such as travel expenses incurred on partnership
business.
Contribution and Indemnity: If a partner pays more than his proportionate
share of the debts of the partnership, he has a right to reimbursement from the
other partners.
Distribution of Capital: If a partnership is dissolved, every partner is entitled to
receive a share of the partnership property after due payment of all creditors and
the repayment of loans made to the partnership by the partners.
Nature and Extent of Partner’s Liability: Partners are jointly and severally liable
for all torts committed by one of the partners in the scope of the partnership
business.
Liability for Breach of Duty: If a partner breaches a duty to the partnership, an
injured partner may recover damages from the partner who breached the duty.
Liability of New Partners: A person admitted as a partner into an existing
partnership has limited liability for all obligations of the partnership which arose
before he was admitted as a partner.
Effect of Dissolution on Partners’ Liability: A partner will remain liable after
dissolution of the partner-ship unless all claims against the partnership have
been paid or the creditors of the partnership have released their claims.
Dissolution of a partnership firm: The dissolution of a partnership firm is the
decision of all partners collectively to terminate the business agreement made
between them.
Dissolution by Mutual Consent: The best and the easiest way to dissolve a
partnership firm is by mutual consent. When the contract that specifies the
partnership comes to an end or the partners mutually agree, due to various
business or personal reasons to end the partnership, they can produce an
agreement for dissolving it.
Dissolution by Notice: If the partnership business is at will, any one partner (or
more) can, through a simple and advanced notice, dissolve a partnership. The
notice should specify the date on which the dissolution comes into force.
Dissolution Due to Contingencies: There are certain clauses/situations wherein
the partnership firm can be/is dissolved:
1.On account of the end of a project/endeavor which the firm was formed to
undertake.
2.By the death of a partner.
3.By the adjudication of a partner as an insolvent or one or more partners.
4.By the expiry of a partnership period. Some firms are started with a clear view
of the tenure for which the partnership will exist.
Compulsory Dissolution: Certain occurrences can make the dissolution of a firm
compulsory.
Dissolution by Court: For the following reasons court may dissolve a
partnership firm.
Due to Mental Instability of any partner: Due to Misconduct Any
partner/partners in the partnership misbehaving with others or not heeding to
the signed agreement of the partnership will find themselves ousted by their
partners through a court case.

5a) Negotiable Instruments


A negotiable instrument is a document guaranteeing the payment of a specific
amount of money, either on demand, or at a set time, with the payer usually
named on the document. More specifically, it is a document contemplated by or
consisting of a contract, which promises the payment of money without
condition, which may be paid either on demand or at a future date. The term
can have different meanings, depending on what law is being applied and what
country and context it is used in.
Important characteristics of Negotiable Instruments are:
1. Property: The possessor of negotiable instrument is acknowledged to be
the owner of property contained therein. Negotiable instrument does not simply
give ownership of the instrument but right to property as well. The property in
negotiable instrument can be moved without any formality. In the case of bearer
instrument, the possessions pass by meager delivery to the transferee. In case of
order instrument, endorsement & delivery are necessary for transfer of property.
2. Title: The transferee of negotiable instrument is called ‘holder in due
course.’ A genuine transferee for value is not affected by any flaw of title on the
part of transferor or of any of the previous holders of instrument.
3. Rights: The transferee of negotiable instrument can take legal action in his
own name, in case of dishonour. A negotiable instrument can be reassigned any
number of times till it is attains maturity. The holder of instrument need not
give notice of transfer to the party legally responsible on the instrument to pay.
4. Presumptions: Certain presumptions are applicable to all negotiable
instruments i.e., a presumption that deliberation has been paid under it. It is not
essential to write in promissory note the words ‘for value received’ or alike
expressions for the reason that the payment of consideration is acknowledged.
The words are typically included to generate additional substantiation of
consideration.
5. Prompt payment: A negotiable instrument facilitates the holder to
anticipate prompt payment because dishonour refers to the ruin of credit of all
persons who are parties to the instrument.