CLAT PG Contract Law And Specific Relief Flashcards

24 sample cards from the Contract Law And Specific Relief deck

Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.

1. What is the nature and extent of a surety's liability under Section 128?

   The liability of the surety is co-extensive with that of the principal debtor, unless otherwise provided by the contract. The surety is liable to the same extent as the principal debtor and the creditor may proceed against the surety without first suing the principal debtor.

2. How is a surety discharged under the Indian Contract Act?

   A surety is discharged by: revocation of a continuing guarantee for future transactions (S.130); death of the surety as to future transactions (S.131); variance in the terms of the contract without surety's consent (S.133); release/discharge of the principal debtor (S.134); a compromise/promise not to sue or to give time to the debtor (S.135); the creditor's act/omission impairing the surety's eventual remedy (S.139); and loss of security held by the creditor (S.141).

3. What is the surety's right of subrogation under Section 140?

   On payment or performance of all that he is liable for, the surety is invested with all the rights which the creditor had against the principal debtor (right of subrogation), stepping into the creditor's shoes to recover from the principal debtor.

4. Define 'bailment' under Section 148 of the Indian Contract Act.

   A bailment is the delivery of goods by one person (bailor) to another (bailee) 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. Delivery of possession and a purpose with eventual return are essential.

5. Distinguish a 'pledge' from an ordinary bailment.

   A pledge (pawn, S.172) is the bailment of goods as security for the payment of a debt or performance of a promise. The bailor is the pawnor and the bailee is the pawnee. Every pledge is a bailment, but a bailment is a pledge only when the purpose is to secure a debt/promise; the pawnee gets a special right to retain and (after notice) sell the goods on default.

6. What are the pawnee's rights on default by the pawnor under Sections 173-176?

   The pawnee may retain the goods for the debt, interest, and necessary expenses (right of retainer, S.173-174). On the pawnor's default, the pawnee may either: (1) sue the pawnor on the debt and retain the goods as collateral security, or (2) sell the goods after giving the pawnor reasonable notice of the sale (S.176).

7. Define 'agent' and 'principal' under Section 182, and state the test of agency.

   An agent is a person employed to do any act for another or to represent another in dealings with third persons; the person for whom such act is done, or who is so represented, is the principal. The essential test of agency is the agent's power to create, modify, or affect the legal relations of the principal with third parties.

8. What is an 'agency by ratification' under Section 196?

   Where acts are done by one person on behalf of another but without his authority, the other person may elect to ratify or disown such acts. If he ratifies them, the same effects follow as if they had been done with his prior authority. Ratification must be of the whole act, by a competent principal who was in existence and ascertainable at the time of the act.

9. Explain the doctrine of 'undisclosed principal' and 'agent's authority' (actual vs. ostensible/apparent authority).

   Actual authority is expressly conferred or implied from circumstances (Ss.186-187). Ostensible/apparent authority arises where the principal's conduct leads third parties to believe the agent is authorised, binding the principal even beyond actual authority. An undisclosed principal (whose existence is not revealed by the agent) may be sued/sue once disclosed, and the third party may elect to hold either the agent or the principal liable.

10. In what ways may an agency be terminated under Section 201?

    An agency terminates by: revocation of authority by the principal; renunciation by the agent; completion of the business of agency; death or insanity of the principal or agent; insolvency of the principal; or expiry of the agency period. An agency coupled with interest (S.202) cannot be terminated to the prejudice of that interest.

11. What is the scope and object of the Specific Relief Act, 1963?

    The Specific Relief Act, 1963 provides remedies for persons whose civil/contractual rights have been violated, where compensation in money is inadequate. It deals with recovery of possession of property, specific performance of contracts, rectification, rescission, cancellation of instruments, declaratory decrees, and preventive relief by injunctions.

12. After the 2018 amendment, what is the rule on granting specific performance of a contract?

    Following the Specific Relief (Amendment) Act, 2018, specific performance is now a general/default remedy (no longer purely discretionary). Section 10 provides that specific performance of a contract shall be enforced by the court subject to the limited exceptions in Sections 11(2), 14, and 16, removing the earlier wide discretion.

13. Which contracts cannot be specifically enforced under Section 14 of the Specific Relief Act?

    Contracts that cannot be specifically enforced include: (a) one where a party has obtained substituted performance under S.20; (b) one whose performance involves continuous duties the court cannot supervise; (c) one so dependent on the personal qualifications of a party that the court cannot enforce specific performance of its material terms; and (d) a contract which is in its nature determinable.

14. Who are the persons entitled to and against whom specific performance may be obtained (Section 15 and 19)?

    Section 15 lists who may obtain specific performance: any party to the contract, the representative-in-interest/principal, beneficiaries under marriage settlements, etc. Section 19 lists those against whom relief may be enforced: either party, any person claiming under him by a title arising after the contract (except a transferee for value who paid in good faith without notice), and a company resulting from amalgamation, among others.

15. What is 'substituted performance' under Section 20 of the Specific Relief Act (as amended)?

    Where a contract is broken, the affected party may, after giving 30 days' written notice to the party in breach, get the contract performed by a third party or his own agency and recover the costs and expenses from the party in breach. Once substituted performance is obtained, the party cannot claim specific performance of the same contract (but may claim compensation).

16. What is an injunction, and what is the difference between a temporary and a perpetual injunction under the Specific Relief Act?

    An injunction is a court order requiring a party to do or refrain from doing a specific act. A temporary (interim) injunction (S.37) is granted to continue for a specified time or until further order and is regulated by the CPC. A perpetual (permanent) injunction (Ss.37-38) is granted by a final decree on the merits, permanently restraining the defendant from asserting a right or committing an act contrary to the plaintiff's rights.

17. When may a mandatory injunction be granted under Section 39 of the Specific Relief Act?

    When, to prevent the breach of an obligation, it is necessary to compel the performance of certain acts which the court is capable of enforcing, the court may in its discretion grant a mandatory injunction both to prevent the breach complained of and to compel performance of the requisite acts.

18. In which circumstances will a perpetual injunction be refused under Section 41 of the Specific Relief Act?

    An injunction cannot be granted, among others, to restrain pending judicial proceedings (except to prevent multiplicity), to restrain a person from instituting proceedings in a court not subordinate, to restrain criminal proceedings, to prevent the breach of a contract not specifically enforceable, to prevent a continuing breach the plaintiff has acquiesced in, or where equally efficacious relief can be obtained by other usual modes, or where the conduct of the plaintiff disentitles him to assistance.

19. What is a declaratory decree under Section 34 of the Specific Relief Act?

    Any person entitled to any legal character or to any right as to property may sue for a declaration that he is so entitled, and the court may make a declaration. The proviso bars the court from making a declaration where the plaintiff, being able to seek further relief than mere declaration, omits to do so ('he who could ask for consequential relief must do so').

20. Define a 'contract of sale of goods' and distinguish a 'sale' from an 'agreement to sell' (Sale of Goods Act, 1930).

    Under Section 4, a contract of sale is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. Where property is transferred at once, it is a 'sale' (an executed contract conveying ownership). Where the transfer is to take place at a future time or subject to a condition, it is an 'agreement to sell' (an executory contract); it becomes a sale when the time elapses or conditions are fulfilled.

21. Distinguish a 'condition' from a 'warranty' under the Sale of Goods Act (Section 12).

    A condition (S.12(2)) is a stipulation essential to the main purpose of the contract; its breach gives the right to repudiate the contract and claim damages. A warranty (S.12(3)) is a stipulation collateral to the main purpose; its breach gives only a right to claim damages, not to reject the goods or repudiate the contract.

22. What does the maxim 'caveat emptor' mean under the Sale of Goods Act, and what are its main exceptions?

    Caveat emptor ('let the buyer beware', S.16) means the buyer must satisfy himself about the goods' quality/fitness; there is no implied warranty of fitness. Exceptions: (1) where the buyer makes known the particular purpose and relies on the seller's skill (implied condition of fitness); (2) sale by description of goods of a merchantable quality; (3) sale by sample; (4) where the seller is guilty of fraud or misrepresentation; and (5) usage of trade implying a condition.

23. What is the general rule on transfer of title by a non-owner ('nemo dat quod non habet') under the Sale of Goods Act, and what are key exceptions?

    General rule (S.27): no one can give a better title than he himself has - a buyer from a non-owner gets no title. Exceptions include: sale by a mercantile agent, sale by one of joint owners in possession, sale under a voidable title not yet rescinded (S.29), sale by a seller in possession after sale, sale by a buyer in possession after sale, and sale by an unpaid seller exercising his right of resale (S.54).

24. Who is an 'unpaid seller' and what are his rights against the goods under the Sale of Goods Act?

    An unpaid seller (S.45) is one who has not been paid/tendered the whole price, or whose conditional payment (e.g., a bill/cheque) has been dishonoured. His rights against the goods (S.46) are: (1) a lien on the goods while in possession; (2) the right of stoppage in transit where the buyer is insolvent and the goods are in transit; and (3) the right of resale. He also has rights against the buyer personally (suit for price/damages).

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