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goods are returned to the bailor. 2.EXPIRY OF TIME When the goods are bailed for a fixed time, the contract of bailment is terminated at the expiry of the time fixed. 3 Agency Agency is a special type of contract. The concept of agency was developed as one man cannot possibly do every ther [ Smith vs. Moss] Classification of Agents - As per section 182, an agent is a person who brings his principal into the contractual relations with the third parties. The principal appoints or employs an agent under the contract of agency. Thus, an agent is the link that connects the principal to the third parties. An agent binds the principal by his acts. In other words, a principal is responsible for the acts of the agent to the third parties. When an agent acts for his principal, he has the capacity of his principal. There are 3 classes of agents: General agent, Special agent and Mercantile agent. Let us discuss the Classification of Agents in detail. Classification of Agents General Agent Special Agent Mercantile Agent 1. General Agent: ST.JOSEPH'S DEGREE & PG COLLEGE transactions or in all transactions relating to a specific trade, business or matter. The principal grants the authority to the agent to act on his behalf. It may be assumed by the third party that such an agent has the authority to do all that is usual for a general agent to do. Any private restrictions on the agent's authority do not affect the third party. 2. Special Agent: He is the one who is appointed or employed to do or perform only a specific act, task or function. Outside of this special act, task or function, he has no authority or power. In this case, the third party cannot assume that the agent has unlimited authority. Thus, any act of the agent outside his authority cannot bind the principal. 3. Mercantile Agent: As per section 2(9) of the Sale of goods act, 1930, a mercantile agent is a person who in the customary course of business has an agent's authority either to sell or consign the goods for the purpose of sale or to buy goods or to raise money on the security of goods. Thus, this definition covers the following: a. Factors: A factor is a person who is appointed to sell goods which are put in his possession or to buy goods for his principal. He is the evident owner of the goods in his custody and can thus sell them in his own name and receive payment for them. He also has an insurable interest in the goods in his custody and a general lien regarding any claim that he may have to arise out of the agency. b. Brokers: ST.JOSEPH'S DEGREE & PG COLLEGE Mba business laws notes A broker is a person whose business is to make contracts with the other parties for the sale and purchase of goods or securities for brokerage. He does not have the possession of the goods and acts in the name of the principal. Also, he has no lien over goods because he has no possession of goods. c. Del Credere Agent: A del credere agent is a person who ensures or guarantees his principal that the creditors of goods will pay for the goods they buy for extra remuneration. In the case of failure to pay by the third party, he needs to pay the due amount to his principal. d. Bankers: The relation between a banker and a customer is basically that of a debtor and creditor. However, when a banker buys or sells securities or collects cheque, dividends, interests, bills of exchange or promissory notes on behalf of his customer, he becomes the agent of his customer. Thus, he has a general lien on all the securities in his possession regarding the general balance due to him by the customer. e. Partners: As per the Partnership Act, every partner is an agent as well as the principal of every other partner in a Partnership firm. Also, every partner is the agent of the firm for the business of the firm. f. Auctioneers: An auctioneer is a person who sells the goods by auction. An auction is a process by which goods are sold to the highest bidder in a public competition. He cannot warrant his principal's title to the goods. ST.JOSEPH'S DEGREE & PG COLLEGE Mba business laws notes He is the agent of the seller until the goods are auctioned or knocked down. However, after the knockdown, he becomes the agent of the buyer. Also, he is evidence that the sale took place. Rights, Duties and Liabilities of Agent and Principal - i. Agent exceeding his authority in an emergency (sec 189) Not in a position to communicate with the principal Taken necessary steps to protect the interests of principal Acted Bonafide Principal is liable for the acts of agent To protect or preserve The authority is implied because of necessity E.g. A horse was sent by train. When it arrived at the station of destination, nobody took the delivery. The railway Co. had to feed the horse. Held the rail Co. was an agent of necessity and could recover the amount spent on horse ST.JOSEPH'S DEGREE & PG COLLEGE Mba business laws notes Termination of Agency . Termination of agency By act of parties By operation of law Agreemen t Revocation by principal Revocatio n by agent Expir y of time Death of either party Insani ty of either party Insolve ncy of either party Destruc tion of the subject matter Princi pal becom ing an alien enemy Dissolutio n of a company ST.JOSEPH'S DEGREE & PG COLLEGE Mba business laws notes Unit III: Negotiable Instruments - Concept - Characteristics- Promissory Note, Bill of Exchange, and Cheques - Types of Crossing; Contract of Sale of Goods - Definition- Essentials of a Contract of Sale - Contract of sale Vs Agreement to Sell - Rights of Unpaid Seller - Rules as to delivery of goods- -Conditions And Warranties-Types-Doctrine of Caveat EmptorDistinction between Condition and Warranty. Concept A negotiable instrument is actually a written document. This document specifies payment to a specific person or the bearer of the instrument at a specific date. So we can define a bill of exchange as "a document signifying an unconditional promise signed by the person giving the promise, requiring the person to whom it is addressed to pay on demand, or at a fixed date or time". Characteristics 1. Must be in writing: A mere verbal promise to pay is not a promissory note. The method of writing (either in ink or pencil or printing, etc.) is unimportant, but it must be in any form that cannot be altered easily. 2. Must certainly an express promise or clear understanding to pay: There must be an express undertaking to pay. A mere acknowledgment is not enough. The following are not promissory notes as there is no promise to pay. Example: 'Mr. B.I.O.U Rs. 10,000'. There is no promise to pay and therefore this is not a valid promissory note. 3. Must be unconditional: A conditional undertaking destroys the negotiable character of an otherwise negotiable instrument. Therefore, the promise to pay must not depend upon the happening of some outside contingency or event. It must be payable absolutely. ST.JOSEPH'S DEGREE & PG COLLEGE Mba business laws notes 4. Signed by the maker: The person who promises to pay must sign the instrument even though it might have not been written by the promisor himself. There are no restrictions regarding the form or place of signatures in the instrument. It may be in any part of the instrument. It may be in pencil or ink, a thumb mark or initials. 5. Must be certain: The note self must show clearly who the person is agreeing to undertake the liability to pay the amount. In case a person signs in an assumed name, he is liable as a maker because a maker is taken as certain if from his description sufficient indication follows about his identity. In case two or more persons promise to pay, they may bind themselves jointly or jointly and severally, but their liability cannot be in the alternative. 6. The payee must be certain: The instrument must point out with certainty the person to whom the promise has been made. The payee may be ascertained by name or by designation. 7. The promise should be to pay money and money only: Money means legal tender money and not old and rare coins. A promise to deliver paddy either in the alternative or in addition to money does not constitute a promissory note. 8. The amount should be certain: One of the important characteristics of a promissory note is a certainty- not only regarding the person to whom or by whom payment is to be made but also regarding the amount. Promissory Note Section 4 of the Act defines, "A promissory note is an instrument in writing (note being a banknote or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money to or to the order of a certain person, or to the bearer of the instruments." Bill of exchange is an instrument ordering the debtor to pay a certain amount within a stipulated period of time. Bill of exchange needs to be accepted in order to call it valid or applicable. And the bill of exchange is issued by the creditor. Promissory Note, on the other hand, is a promise to pay a certain amount of money within a stipulated period of time. And the promissory note is issued by the debtor. Bill of Exchange, ST.JOSEPH'S DEGREE & PG COLLEGE Mba business laws notes A bill of exchange is defined as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. - Negotiable Instruments Act, 1881 Bill of exchange is an instrument ordering the debtor to pay a certain amount within a stipulated period of time. Bill of exchange needs to be accepted in order to call it valid or applicable. And the bill of exchange is issued by the creditor. Promissory Note, on the other hand, is a promise to pay a certain amount of money within a stipulated period of time. And the promissory note is issued by the debtor. Cheques A cheque is a bill of exchange, drawn on a specified banker and it includes 'the electronic image of truncated cheque' and 'a cheque in electronic form'. The cheque is always payable on demand. A cheque must contain all the characteristics of a bill of exchange. Types of Crossing; Basically, there are 3 types of cheque crossing: General Crossing In general crossing, the cheque bears across its face an addition of two parallel transverse lines and/or the addition of words 'and Co.' or 'not negotiable' between them. In the case of general crossing on the cheque, the paying banker will pay money to any banker. For the purpose of general crossing two transverse parallel lines at the corner of the cheque are necessary. Thus, in this case, the holder of the cheque or the payee will receive the payment only through a bank account and not over the counter. The words 'and Co.' have no significance as such. But, the words 'not negotiable' are significant as they restrict the negotiability and thus, in the case of transfer, the transferee will not give a title better than that of a transferor. Restrictive crossing Restrictive crossing involves the crossing of a cheque through two parallel lines on the left corner of a cheque. The words A/c payee are inserted inside the parallel lines. ST.JOSEPH'S DEGREE & PG COLLEGE Mba business laws notes According to this crossing, the cheque can be collected by the bank only for the person, whose name is written on the cheque. Contract of Sale of Goods - A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. The term ' contract of sale ' is a generic term and includes both a 'sale 'and an 'agreement to sell'. Definition Contract of sale of goods is a contract, whereby, the seller transfers or agrees to transfer the property in goods to the buyer for a price. There can be a contract of sale between one partowner and another. Essentials of a Contract of Sale - 1.Two parties There must be two distinct parties , i.e., a buyer and a seller, to the effect a contract of sale and they must be competent to contract. Buyer means a person who buys or agrees to buy gods 2.Goods: The goods which form the subject-matter must be movable. Transfer of immovable property is not regulated by the Sale of goods act. Associated Hotels of India Vs Excise & Taxation Officer ST.JOSEPH'S DEGREE & PG COLLEGE Mba business laws notes A hotel company provided residence and food making a consolidated charged for both the services. No rebate was allowed if food was not taken by the customers. Held, supply of foods was not sale of goods but simply a service as the transaction was an indivisible contract of multiple services and did not involve any sale of food. 3.Price Aldridge Vs. Johnson A agreed to exchange with B 100 q