Contract

Law of Contract

Man should fufill his promise whatever he made

Jurist	Definition
Anson	Tells situations when promise should be legally binding
Sir Frederick Pollock	Constant effort to deliver faith in mutual dealing of men

History of Origin

Year	Law
Ancient India: Hindu Law(Code of Manusmiriti=Dharmshatra)	Contract based on adherence to Truth & religious notions. It’s person’s duty to pay debt if he does not he will go to horrid hell
Muslim Period	Contract is called Aqd
1872	Britishers introduced Indian Contract Act,English Common Law,Statue Law(introduced in Calcutta, Madras, Bombay). But still Hindu, Mohmadean laws were referred

Contract Types

Contingent(Chance)

May or may not happen.Some uncertain/future event, happening of event is beyond the parties. NOT a legal contract

Quasi

Doing something Criminal or civil wrong, or against the public good. Selling firearms to person not having license. NOT a legal contract.

Void contract (NOT legal contract)

A legal obligation imposed by a judge to remedy a dispute between two parties that don’t have a contract
Agreement without consideration (Girvi) is void
Example: A to B(I will give you 100/-). A does not give anything to B. This is void contract
Exceptions to this rule:
- Rule stands void for natural love & affection relationships
- Promise to compensate something voluntarily
- Gifts

S-27. Agreement restraining trade is void: Every aggrement which restricts anyone from excercising lawful profession, trade or business is void
Exceptions to this rule
- Sale of Goodwill. A is doing good business sells/moves his business out of area where B will setup his business
- Restraint to outgoing partner
- Partners enter aggrement that none will carry any other business except mentioned in contract

Aggrement restricting a party of legal proceeding is void: agreement that restricts a party from enforcing their rights in court is void Exceptions to this rule:
- Resolve present disputes with arbitration(ie outside court)

Voidable

A contract which is not legally enforceable from the time it was created. Eg: contract where both parties are minors. NOT legal contract

Wagering(Bet/Gamble)

This is void contract. NOT a legal contract.

Fradulant

When object of contract is fraud.
Case(1884 Sahib Ram v Nagar Mal):
We are in contract to do fraud with comminssrant dept. Object of contract is fraud Hence void contract.

Contract of indemnity(means insurance compensation paid for damage) (sem-2)

1 Party promises to protect the other from loss caused by actions of another person.
Eg: A car owner purchases insurance as an indemnity for various types of loss.

Rights of indemnity holder when sued(sem-2)

1. Damages: The holder can claim compensation from the duty-bearer if their property is damaged or they incur losses due to the acts and facts stated in the indemnity agreement.
2. Costs: The holder can claim payment for reasonable expenses from the amount stated in the contract.
3. Sums: The holder can claim payment for sums stated in the form of a tax, fine, or penalty

Essentials of contract of indemnity (sem-2)

1. Offer and acceptance
2. Legal purpose
3. Protection from losses
4. Capacity of the parties
5. Consideration
6. Free consent
7. Legality

Contract of guarantee/sureityship (sem-2)

A(Gurantor/Promisor/Surety) says to B(Creditor). Give money to C(Debitor), if he is not able to repay I will pay it.

Contract of Indemnity vs Contract of Guarantee(sem-2)

	Contract of Indemnity	Contract of Guarantee
What	Contractual obligation to compensate for loss	Promise to perform another party's promise
Number of parties	2	3
Purpose	used to compensate for a loss	protects the creditor

Contract of Sale of Goods (sem-2)

Legal agreement between a buyer and a seller that transfers the ownership of goods for a price.
The contract can be verbal or formal.
Condition is a fundamental term that is essential to the contract's main purpose
Warranty is a collateral term that provides additional assurances or guarantees

1930. Sale of Goods Act, need:
- Two parties, a buyer and a seller
- The seller to transfer or agree to transfer ownership of the goods to the buyer

Unpaid Seller (sem-2)
Seller is someone who has not been paid for goods or services they have provided.
Rights of unpaid Seller:
- Right of lien: The right to keep the goods in their possession until the buyer pays the full price
- Right of stoppage in transit
- Right to withhold delivery
- Right to resell
- Right to sue the buyer

Sale vs Aggrement to sell

	Sale	Aggrement to sell
What	Transfers ownership of the goods immediately to the buyer	Only establishes the intent to transfer ownership in the future
Owner	buyer becomes the legal owner of the goods after paying the price.	Ownership is not transferred until certain conditions are met or a future date is reached
Example	Sale will happen when construction is complete and the remaining amount is paid	Pay a token amount to purchase an under-construction flat

Auction Sale(sem-2)
Sale is a public sale of goods or property where buyers bid for purchase and the sale is made to the highest bidder
Auctions can be conducted live or online, and there are two types of auctions: closed and open
- Closed auction: bidders are not aware of competing bids
- Open auction: such as a livestock auction, bidders are aware of the other bids
Examples of auctions: Livestock markets where farmers buy and sell animals, Car auctions

Buyer's remedies against seller for breach of contract (sem-2)
Recover damages
Cancel the contract
Recover the price
Withhold further delivery
Stop delivery
Repudiation(rejection of duty when it comes to contract) of contract
Resell
Retain deposits

Effect of perishing goods before contract of sale(sem-2)
contract is void, this is because the goods no longer match the contract's description
The goods must not perish before the buyer takes ownership and risk of the goods
Impossibility of performance is a defense against a breach of contract when one or more parties cannot fulfill their contractual obligations under normal circumstances

Following are incompetant for Contract

a. Minor(1. Less than 18 years. 2. if he has legal gurdian, minority continues to 21 years). Minor's Contract is illegal, cannot be enforced
b. person with unsound mind
c. person disqualified by law for contract

Conditions under which contract stands Terminated/Discharged

1. Completed. a. Both parties have done whatever agreed in contract b. Contract Excused by law
2. Breach
3. Contract becoming immposible or unlawful
4. Alteration of contract
5. Waiver. promisee waives promiser
6. Accord
7. Merger, Insolvency

1872, Indian Contract Act

This is not complete code, relating to law of contracts. In such cases Court excerises its jurisdiction from Hindu, Mohammedon Law of contract.

Mistake of Fact, Mistake of Law

Types of Mistake of Fact:

1. Bilateral mistake(S.20): Both parties in aggrement done mistake, this contract becomes void
2. Unilateral mistake(S.22): Only 1 party caused mistake. Contract does not become void

Types of Mistake of Law

1. Mistake with regard to native law
2. Mistake with regard to private right
3. Mistake with regard to forign law: A,B makes contract on erroneous belief on bills exchange in france. contract is void.

Ingredients of contract

1.Contractual aggrement
2. No misinterpretation
3. Reasonable notice to contractual terms
Case: 1999(Prakash Roadlines(P) Ltd vs HMT Bearing Ltd). Mere printing on lorry reciept(Good transported on owner’s risk will not absolve transporter from duty).
4. Notice should be contemporaneous(existing) with contract
5. Terms of contract should be reasonable

5 Essential Elements of a Contract (Offer, Acceptance, Consideration, Capacity, Legality OACCL)

1. Offer/Proposal

Expression of willingness by 1 person to another to create Legal/monetary relation

Elements of Offer
- Intention: This is Mere intention
- Communication to offree: This intention must be communicated
- Mere answer to question is neither offer not acceptance
- Request(not order) - Can be revoked anytime before acceptance

Types of offer
- Positive offer
- Negative offer
- Specific/Conditional offer

        sequenceDiagram
            box Harvey vs  Facey(1893) AC 552
            participant p as plantiff
            participant d as defendent
            participant c as Court
            end
          
            p ->> d: Telegram. Will you sell Bumper Hall pen(Plot of land)
            d -->> p: Price=900 Euro
            p ->> d: I will buy
            d -->> p: Not selling
            d ->> c: I want land
            c -->> d: Not provided
            note over c: Answer to question is not:
Offer
Acceptance            
        

2. Acceptance

When person accepts the proposal, offer is said to be accepted.

Essentials of Acceptance

- Absolute: yes or no
- Signed form
- Communcation: of acceptance must be made by acceptor or his authorized agent
- Mental acceptance is no acceptance - Acceptance of general offer need not to be communicated

3. Consideration (Girvi)

Something of value that is exchanged between the parties to a contract

Cases

Unlawful considerations: A sends message to B(I will give 100/- to attack C). B response(Ok).
1930, SitaRam v Harihar: Adoptive Father to natual father(I will give you x amount and keep your son) Natural father(ok). Court: Father can give son to keep only by love not for money

4. Capacity

A person is legally able to enter into a contract if they are competent to do so. Eg: person should not be minor

5. Legality

Aggrement vs Contract

	Aggrement	Contract
Legally Binding	no	yes
Enforcable	no	yes
Elements	Offer, Acceptance	Offer, Acceptance, Consideration, Intention (OACI)

Bailment(sem-2)

Owner of property transfers physical possession to another person for a time, but retains ownership. Eg: Delivery of cycle, scooter or watch for repair.
Bailer: Person who is delivering the goods.
Bailee: Person to whom goods are delivered for repair (temporary possession).

Essentials of bailment

Delivery of goods, Return goods, Indemnify(compensate someone for damages or losses) bailee, Delivery of possession, Duty of reasonable care, No unauthorized use of goods To keep the bailed goods separate, A valid contract, Duty to return

Types of Bailment

Gratuitous bailment: When someone gives their possessions to someone else for a courtesy, and no compensation is paid. For example, valet parking.
Bailment for reward: When the bailee receives payment from the customer, and the relationship is contractual. For example, a customer pays a business to repair a vehicle.
Deposit bailment: When someone transfers their items to someone else for security or safekeeping.
Loan for use bailment: When someone loans their items temporarily to someone for use. For example, John letting Sarah drive his car while it's at her house.
Pledge Consignment: When the consignee is not just a bailee, but also an agent of the consignor to sell the goods
Lien: it's a claim that a creditor has over debitor's property until a debt is paid off. Example: Lien is a mortgage. When you take out a mortgage to buy a house, the bank (creditor) places a lien on the house. If you fail to repay the loan, the bank will take ownership of it to satisfy the debt.

Duties of a Bailee

Take proper care of goods, Not to make unauthorized use, Keep goods separate, Not set adverse title, Return Goods, Return increase or profits.

Bailment of Pledges

Pledge(Promise). Keeping goods in custody of Pawnee until debt is not repaid.
Bailer in this case is called Pawner. Bailee is called Pawnee.

Essentials of Valid Pledge:
1. Delivery of property
2. Pawnee has rights to retain goods of Pawner.

Pledge

When goods are used as security for payment of a debt or performance of a promise. The person who pledges the goods is known as the pledgor, and the bailee is known as the pledgee

Circumstances in which Non-owner can make a valid pledge of goods

1. Mercentile Agent: A agent who has owner's consent to possess the goods & have the goods' title documents, 3rd party doesn't know he's agent & treats him as a owner.
2. Person in possession of goods makes valid pledge, for voidable contract: A gives painting to B to sell in art exhibition A tells B that painting is not genuie, and B sells it to C (as if it belongs to B).
3. Seller or buyer in possession of goods after the sale: A seller who still has possession of the goods after the sale or a buyer who gets possession of the goods with the seller's consent

Terms

Surety, Debitor, Creditor(sem-2)

Surety, Co-Surety

Surety: is a person or entity that guarantees to pay a debt if the debtor is unable to do so
Co-Surety: is a person who agrees to share the responsibility for paying off someone else's debt or fulfilling their obligations with another person

Debitor, Creditor

Creditor=Person who gives money. Debitor=Person who takes money/loan from creditor

Rights and obligations of co-sureties

1. if co-surety(no=1) can pay all debts, He will get equal contribution from the other co-sureties.
2. Co-sureties can be bound in different amounts, they must pay total amount guaranteed by each of them.
3. If the principal debtor fails to pay the debt and the creditor asks only one surety to fulfill their duty, that surety can ask the other co-sureties to fulfill their responsibility.
4. Creditor's decree against the major debtor can also be extended against the sureties
5. Release of co-surety donot discharge others.

When is surety discharged

As per Indian Contract Act of 1872, surety can be discharged under following situations:
1. Creditor has released principal debtor
2. Creditor does something that is against Surety's rights. Eg: Changing the contract without surety's consent
3. Death of the surety
4. Change in composition of contract: if the creditor changes contract terms

When is surety not discharged

1. When creditor does not sue the principal debtor: (A:Debitor, B:Surety, C:Bank/Creditor). C does not sue A for 1 year after the debt becomes payable, then B is not discharged
2. More time given to debitor by Creditor: (A:Debitor, B:Surety, C:Bank/Creditor). At Time to repay loan, A is not able to give loan back to C. C extends time. B is not discharged.
3. When there are multiple co-surities, Creditor may relese 1, this does not release other surities
4. if creditor losses the deposited security, then surety is free from amount-lost security.

Liability of surety is coextensive with that of principal debtor

Indian Contract Act(S-128), The surety is liable for the same amount as the principal debtor, and no more
A special contract can limit the surety's liability to less than the principal debtor's liability, but never more.

Cases
1969. Bank of Bihar v Damodar Das: If debitor is minor or not under purview of contract, Surety is not freed and Creditor can sue him anytime under contract terms.
1982. Official Liquidator v Maharastra State Electricity Board if debitor does mistake in contract, surety Will be held responsible.

Agency, Agent, Principal(sem-2)

Agent: A person who is employed to act for another person or represent them in dealings with third parties.
Principal: The person for whom the act is done, or who is represented.
Agency: Agency is legal relationship between an agent and a principal, where the agent has the authority to act on behalf of the principal and consents to do so.

Agency

Essentials of Agency

1. Defining the relationship: The principal-agent relationship should be defined.
2. Specifying authority and scope: The authority and scope of the agent should be specified.
3. Outlining duties and compensation: The agent's duties and compensation should be outlined.
4. Addressing termination and liabilities: The contract should address termination and liabilities

How Agency is created

1. Express agency: Principal appoints the agents in express manner.
2. Implied agency: arises from situation, conduct or relationship between parties.
3. By Necessity:
a. Law creates relation b/w agent and principal.Eg: Husband has to take care of his wife.
b. Law allowing to exceed his duties in case of emergency. Eg: Good carrier can take decisions on case of jeopardy.
4. By estoppel(Legal principle which prevents someone from making claims or asserting rights that contradict what they have previously said or done) or holding out:
1857, Solomon v Summers: A was owner of shop. B was running it at name of A. Selling goods at name of A to C. B did fraud and ran away. C made A responsible for same.
5. By Ratification(official way to confirm something, usually by vote): Also called agency by subsequent authority or ex-post facto agency. Principal ratifies an act done on their behalf by an agent who didn't have the authority to do so.

Circumstances:
- Agent performs act in excess to his authority.
- Notice to agent is notice to principal

Agent

Kinds of Agent

1. General agent: A general agent can be a business manager, but is usually limited to business operations.
2. Special agent: Performs specific act. Special agents have specialized training and responsibilities.
3. Subagent: A real estate agent or broker who brings a buyer to purchase a property. A subagent is not the property's listing agent.
4. Commission agent: Buys or sells goods for their principal. They receive a commission.
5. Learning agent: An agent in artificial intelligence (AI) that uses machine learning techniques to learn from past experiences.
6. Independent contractor: Contractor is hired but not directly controlled or supervised by the principal, works Independently.
7. Goal-based agent: They can choose the best action from their available options to achieve their goals.
8. Simple reflex agent: The simplest type of agent. They make decisions according to a set of rules using their current percept.
9. Auctioneer: who sells goods or property at a public auction, or open sale, on behalf of a seller.
10. Broker: Broker is an agent who can both buy and sell goods, while an auctioneer can only sell.
11. Del credere agent: Person or company that guarantees the principal will pay for goods or services sold by the agent
12. Pakka adatia Agent: legal entity that conducts commercial business in the Bombay market.

Rights of Agent towards a principal

Compensation, reimbursement, indemnification, access to information, and the right to terminate the relationship under specific conditions

Duties of Agent towards a principal

1. Loyalty, care, obedience, accountability, and confidentiality towards the principal
2. Potect and preserve the interest: agent must represent the interests of the principal
3. Execute the mandate: follow the principal's reasonable instructions and act only as he or she is authorized
4. Keep an accounting: all property exchanged, received, or given on the principal's behalf should be book-keeped.
5. Not to delegate his authority
6. not to make a secret profit

Are these Agents of One Another? (sem-2)

1. Husband & Wife? A husband and wife are not agents of one another, unless whey enter in contract to become agent of the other. Agency is a legal relationship where one person (the agent) acts on behalf of another (the principal)
2. Corporation & Govt Government corporation is a company or agency that is owned by the government but operates independently
3. Firm and Partner Yes, As per Partnership Act 1932, a partner is an agent of the firm.

Under what circumstances Agent is personally liable? / Doctrine of Hodling Out

1. if they commit a wrongful act or omission while acting on behalf of their principal
2. The agent exceeds their authority and the principal has not ratified(something has been officially approved) it
3. The agent is acting for a foreign principal
4. The agent enters into a contract in a personal capacity
5. The agent enters into a contract on behalf of a person who cannot be sued, such as a minor, lunatic, ambassador, or foreign
6. Undisclosed Principal. When agent does not disclose name of principal

Pretended Agent

Someone who falsely claims to be an agent of another person, but has no authority over them.

Liability of Pretended Agent / Doctrine of Holding Out
- S-235(Indian Contract Act 1872), a pretended agent is liable to compensate a third party for any losses or damages they incur
- However, if the principal approves of the agent's actions, they can protect the agent from liability.

Principal

Rights of Principal towards agent

Expect the agent to fulfill their duties honestly and diligently as outlined in the contract.
Seek damages and compensation for losses if the agent breaches their duties or causes harm to the principal through negligence or misconduct

Duties of Principal towards agent

1. Compensate the agent for their work and to reimburse any expenses incurred during the representation.
Act in good faith and deal fairly with their agents.
2. The principal is liable for any fraud or misrepresentation made by their agent during the course of their business, as if the fraud or misrepresentation was done by the Principal himself
3. Non-liability of employer on Agent's criminal acts
4. Principal must Compensate agent for Injury caused by him to agent.

How far principal is liable towards 3rd parties for act of agent

When an agent commits a wrong/tort/fraud while acting within his actual authority, the principal is liable for his acts. An agent is also personally liable in this case and can be sued also.

Undisclosed Principal

A person who authorizes an agent to act on their behalf. The agent does not inform the 3rd party that they are acting on behalf of the principal, and may even pretend to be acting on their own

Rights of Undisclosed Principal
- Can be sued by a 3rd party, can also sue 3rd party in some circumstances
- Principal is liable for unauthorized acts of the agent.

Pawnor, Pawnee

Pawnor/Pledgor: Who gives goods to Pawnee to keep and takes money in lieu of goods
Pawnee/Pledgee: Person who keeps the goods, gives money & returns the goods after the debt is paid.

Consent

When 2 or more parties agree upon same thing in same sense
- Free Consent: Consent which is not caused by Force, undue influence, fraud, misrepresentation, or mistake
- S. 15 Coercion: Consent that is not free. Committing or threatning to commit

Novation (Rennovation)

Process of replacing an existing contract with a new one, where the same obligations are performed by different parties.

Quantum Meruit (latin term. Quantum(How Much), Meruit(deserved))

Court awards reasonable compensation to a person who has completed a contractual obligation, even if the contract did not explicitly provide for that compensation

Anticipatory breach of contract

when 1 party in contract indicates he cannot fulfill his contractual obligations before the performance is due. Other party can take legal action against party who denied

Agreement in restraint of marriage

Contract that prevents someone from marrying, This is illegal

S.16 Undue Influence

When someone uses their power or authority in an unfair way to influence a legal decision
Essentials of undue influence:
- 1 party has ability to dominate will of other
- Making contract with person whose mental capacity is affected by age,illness or mental

S.17 Fraud

Deceive other party with false information
Essentials of fraud:
- act must be conducted by party in contract or his agent
- act committed with intent to decieve

S.18 Misrepresentation

When someone unintentionally provides false information

Promise

        sequenceDiagram
            participant d as Dharmodas Ghose
            participant b as Bramho Dutt
            participant k as Kedar Nath(Attorney of Brahmo dutt)
            participant m as Mother of Dharmodas Ghose
            participant c as Court
          
            b ->> d: 20/July 1895
20000/- given
interest of 12%/annum
for house
            k ->> d: Sign declaration
Age of Dharmodas Ghose
is 21 years. 1 month
            d -->> k: signed
            m ->> k: 15/july 1895
Dharmodas Ghose is minor
(ie Age<21) since
I am his legal gurdian
            m ->> c: 10/sept 1895
Filed suit
Dharmodas Ghose was minor
Hence pending mortgage is void
            note over c: Decision of court
Contract with minor is 
void ab-inito(void from beginning)
        

nemo dat quod non habet / No one gives what they do not have (sem-2)

Person who doesn't have adequate ownership of property or goods can't transfer ownership to another person
if someone doesn't own something, they can't sell it.
The rule aims to prevent the trafficking of stolen or illegally obtained goods. Eg: if someone stolen a car he cannot sell it

Exceptions to this rule

- Estoppel: If someone acts in a way that leads another party to believe they have the authority to transfer ownership, they may be estopped (legally prevented) from denying the transfer later, even if they didn't own the property initially.
- Mercantile Agent: A mercantile agent, such as a commission agent or broker, may have the authority to sell goods on behalf of the owner, even if they don't own the goods themselves
- Sale by Seller in Possession: In some cases, a seller who is in possession of goods may be able to pass a good title to a buyer, even if the seller doesn't own the goods, provided certain conditions are met.
- Sale under a Power of Sale: Sometimes, a person may have the legal authority to sell property even if they don't own it outright.

Doctrines

	Meaning
Doctrine of Caveat Emptor (sem-2)	Caveat(Warning), Emptor(buyer or purchaser). Latin phrase that means "let the buyer beware". Doctrine that requires buyers to examine property before making a purchase. Buyers who don't meet this burden can't recover for defects in the product This arises from the asymmetry of information between a purchaser and a seller. The seller tends to possess more information regarding the product than the buyer Exceptions to caveat emptor Fraud: If the seller sells through fraudulent means Deceit: If the seller intentionally misrepresents or conceals facts Negligent misrepresentation: If the seller provides false information due to negligence Goods sold by description: If the goods don't match the description Goods of merchantable quality: If the seller doesn't provide goods of merchantable quality Sale by sample: If the rest of the goods don't resemble the sample Seller's expertise: If the buyer relies on the seller's technical expertise and experience Latent defects: In real estate transactions, a vendor is liable for undisclosed latent defects that make a property dangerous or unfit for its intended use
Doctrine of Caveat Venditor(sem-2)	Caveat(Warning), Venditor(Seller) Latin phrase that means "let the Seller beware". Sellers are responsible for their products' quality and should know if they're not good enough. In this case, the seller is responsible for any faults in the product, not the buyer Cases 1936 Grant v Australiam Knitting Mills. A purchased 2 pants from mill, wore next day and got ill. Mill had negligibly dissovled irritating chemical in cloth. 1922 Rea Ltd v Mahcester Liners Ltd. Manchester(was Ship) who ordered coal for ship from Rea. Rea supplied generic coal which did not fuled Manchester.
Doctrine of Frustration	Allows a party to be released from a contract if unforeseen circumstances make performance impossible. Eg: A and B agrees to marry. Before date of marraige A goes mad. contract becomes void. Essentials: valid/existing contract between parties, Some part must remain to be performed.
Doctrine of Holding Out (Section-28, Indian Partnership Act of 1932)(sem-2)	A person can be held liable as a partner in a firm, even if he's not designated partner on papers, if they represent themselves as a partner through words, actions, or silence A meets B and tells He's partner of firm C. B trusts A purchases goods of C and later gets loss, Now A is liable to pay losses. Essentials of Doctrine of Holding Out - Representation: A person voluntarily represents themselves as a partner of firm, by words/conduct/or writing - Knowledge of representation: 3rd party must be aware of the representation.
Doctrine of Implied Authority(sem-2)	An agent can act on behalf of a principal without explicit authorization How Scope of an agent is decided by actual authority: - Written or oral agreement between the agent and principal - Relevant business/profession(Eg: In Insurance, Agent is given high authority)
Doctrine of Immposibility	law does not compel a man to do anything vain or impossible or to do something which he cannot possibly perform.
Doctrine of Privity of Contract	A contract cannot impose obligations or confer rights on anyone who is not a party to the contract
Doctrine of Privity of Restitution(Payment of damage/restoration)	legal provision to restitute party for any mistaken court judgment or wrongful gains Case: 1928. Khan Gul vs Lakha Singh: Minor was asked to return Rs 17500/-. Allahabad High court verdict. Minor cannot be asked to give any relief to other party

Gurantee(sem-2) A will pay, if B is not able to pay loan

	Continuing guarantee	Simple guarantee
What	Extends over series of transactions over a set time limit,A will pay series of amount if B cannot pay	Surety's liability ends when the debt is paid or the performance is done
Revocation	Can be revoked by the surety at any time	cannot be revoked in any circumstances
Liability(legally responsible)	Surety's liability is co-extensive with the principal debtor's	Surety's liability ends when the debt is paid or the performance is done
Duration	Has a set time limit or duration, such as one month or one year	Does not end after a single promise or debt is repaid

Parternership(sem-2)

Contractual agreement between two or more people to do business together.
Each partner contributing money, property, labor, or skill, and sharing in the profits and losses

Characteristics of a partnership

1. Sharing of profits and losses. Remember sharing of profits is not only crietria of partnership
2. Unlimited liability
3. Lawful business
4. Contract must be present
5. Mutual agency

Comparison

Co-ownership v Partnership

	Co-ownership	Partnership
What	multiple people jointly own a property	two or more people work together to run a business for profit
Based on	Based on an agreement/inheritance/by law without a contract	always created by a contract
Business motive	common enjoyment of property	profit
Liability	co-owners' liability is limited to the value of their stock certificates.	partners are equally and personally liable for all business debts and obligations

Registered company v Partnership

	Registered company	Partnership
Seperate Legal Entity	yes. can have own assets and property	no. partners are personally liable for the partnership's debts
Capital requirements	1 lakh to start	No min capital
Taxes	Tax exempted	Must pay taxes on profits

Joint Hindu Family(HUF) v Partnership

	Joint Hindu Family(HUF)	Partnership
Formation	HUF is formed by birth in the family.	Partnership is formed by a contract between partners
Governance	HUF is governed by Hindu law	Governed by the Partnership Act of 1932
Liability	Head has unlimited liability and other members have limited liability	All partners have unlimited liability
Membership	Membership is limited to male members	Women can be full partners

Types of Partners(sem-2)

	Incoming	Outgoing
What	New partner who joins the firm by contract or is added by the firm A new partner can only be introduced to a firm with the consent of all existing partners	Partner who leaves the firm, either by death, expulsion, or retirement S-33, Indian Partnership Act. A partner can also be removed from the firm if certain conditions are met
Rights and liabilities	- liable for the firm's debts and acts from the date they join - Not liable for anything that happened before	- Right to compete: Continue a competing business - Right to share subsequent Profits: Share any profits that come after they leave until they are paid what they are owed
Modes of Retirement		By consent, aggrement, notice, insolvency, death, explusion(Expell by majority of partners).

Dissolution of Partnership Firm

This is formal termination of a firm's business, including the disposal of assets and the settlement of liabilities, accounts, and assets. End of the relationship between all of a firm's partners.

Modes of Dissolution of Firm

Compulsory dissolution
Dissolution by notice
Insolvency(a debtor's inability to pay their debts)
Dissolution by agreement
Death of a partner
Resignation of partner
Misconduct
Transfer of interest
Admission of a new partner

Can minor be partner in partnership firm

No, minor cannot be a partner in a partnership firm
With the consent of all the partners, a minor can be admitted to the benefits of the partnership.

Rights and liabilities of minor admitted to benefit of partnership

Rights: - The minor is entitled to a share of the firm's property and profits
- Minor can inspect firm's accounts
- Has the right to sue the partners for payment of their share or for accounts,

Liabilities:
- Minor is not personally liable for any losses.

Goodwill of firm(sem-2)

Its reputation and market position, especially in monetary terms
Calculated based on a firm's expected profits, which are higher than normal profits

Goodwill = P - (A+L). //P=Purchase price of the target company, A: = Fair market value of assets, L: = Fair market value of liabilities

Factors on which Goodwill is made

A company's name
Brand reputation
Loyal customer base
Customer service
Employee relations
Proprietary technology

Rights and duties of a buyer and seller of goodwill

Buyer's rights
Buyer who purchases a business/name with goodwill has right to continue the business under the same name, solicit(ask, request, or recommend) former customers, and prevent the seller from doing the same

Seller's rights
Can continue to run a competing business, but this is subject to an agreement with the buyer.

Process of registering firm in indian partnership act

Select a name for the firm
Draft the partnership deed
Get the partnership deed notarized
Obtain a PAN card for the firm
Apply for registration
File the required documents
Pay the required fees
The registrar verifies the documents and issues a registration certificate

Partnership at Will

No fixed expiration date and no agreement preventing any partner from dissolving it

Property of firm / Partnership property

All property that firm acquires for the purpose of running its business.
Includes:
- Property originally brought into the firm
- Property purchased, and
- Property from the firm's goodwill
Property of a firm is subject to the contract between its partners