Operation of law. Merger. Alteration. Insolvency. a lease, and before the end of seven years A assigns his whole interest in the lease to C, B may sue A at once. It matters not whether the impossibility is created before performance is due1 or in the course of performance. This form of discharge is not noticed by the Contract Act. (5) Contracts, lastly, may be discharged by operation of law, as in the case of merger, alteration, or insolvency. As in India a deed has no higher efficacy than a simple contract, the operation of merger is far more limited in India than in England. A decree, as we have seen, extinguishes by merger the right of action arising from breach; and when the owner of a charge on immoveable property buys or otherwise becomes absolutely entitled to that property, the charge is extinguished, unless he declares that it shall continue to subsist, or such continuance would be for his benefit". So if a bill of exchange which has been negotiated is, at or after maturity, held by the acceptor in his own right, all rights of action thereon are extinguished 5. For a contract in writing to be discharged by alteration without consent, the alteration must be (1) intentionally made by or on behalf of one of the parties, (2) made without the consent of the other party, and (3) made in a material part. The Contract Act contains no provision as to these matters. As to the effect of material alterations of negotiable instruments, see Act XXVI of 1881, sec. 87 infra. The statutory release of an insolvent from liability in respect of debts is provided for by the Code of Civil Procedure, secs. 357, 358, and (in the Presidency Towns) by 11 & 12 Vic. c. 21, secs. 59, 60, 61. Special Having thus noticed the chief rules in force in India as to Concontracts. tract in general, we may now proceed to consider some of the special kinds of contracts. The following remarks are arranged according to the classification proposed by Prof. Holland, Jurisprudence, pp. 233, 250°. According to him all contracts are either principal or accessory. 1 Lovelock v. Franklyn, 8 Q. B. 371. P. C., 9 Cal. 961. 4 Act IV of 1882, sec. 101. I have added under the sub-head of 'Alienation' a fourth species, Assignment of contractual rights. I have also placed under Principal Contracts a fourth head relating to con tracts to create a trust. II. Accessory Contracts are those whose object is to create a right which is to be merely ancillary to another right. Of these the chief are Of these there are three chief kinds, Gift, Exchange, and Sale. Alienation. An agreement to give, i.e. to perform a mere act of liberality, be- Gift. Exchange. Sale. comes a contract when it is (1) expressed in writing, (2) registered, and (3) made on account of natural love and affection between parties standing in a near relation to each other'. The acceptance of the thing given must be made during the donor's lifetime and while he is still capable of giving. If the donee die before acceptance, the gift is void. For the purpose of making a gift of immovable property, the transfer must be effected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses, and for the purpose of making a gift of movable property, the transfer may be effected either by a registered instrument signed as aforesaid or by delivery 2. In India, as in England, a voluntary alienation is not allowed to defeat the claims of creditors3. Exchange or Barter is where one thing is given for another, neither thing or both things being money only. A transfer of property in completion of an exchange must be made in manner provided for the transfer of such property by sale. The rights and liabilities of the parties are set forth in the Transfer of Property Act, chap. VI. Sale is defined in the Contract Act (sec. 77) as 'the exchange of property for a price,' and in the Transfer of Property Act (sec. 54) as 'a transfer of ownership in exchange for a price paid or promised, or part-paid and part-promised.' The formalities imposed on contracts for sale of immovable property are these :-When the property is tangible and worth Rs. 100 or upwards, or when it is intangible (as in the case of a reversion) of any value, there must be a registered instrument. When it is tangible and worth less than Rs. 100 there must be either a registered instrument or delivery. No formalities are required on sales of moveable property, except in the case of shares in a company, which can only be transferred in the manner provided by the regulations of the company. Subject to the observances of those formalities when required, the contract is complete when the price is agreed on. The ownership is transferred in the case of immovable property the contract is complete. In the case of goods there are special rules applicable, (a) where the goods are unascertained, unmade, or unfinished, (b) where they are sold with immovable property, (c) 1 Act IX of 1872, sec. 25, cl. 1. This does not appear to include gifts in contemplation of marriage. 2 Act IV of 1882, secs. 122, 123. This Act is not yet in force in the Panjab, the Presidency of Bombay, or Burma. 9 Act IV of 1882, sec. 53. 5 The Contract Act, sec. 79. where they are sold by auction1. An unpaid vendor of immovable property has a charge upon the property in the hands of the buyer for the amount unpaid and for interest thereon 2. An unpaid vendor of goods has a lien on the goods as long as they remain in his possession. Where he has parted with the possession of them, he has the right of stoppage in transitu, that is, he may, if the buyer becomes insolvent, stop the goods while they are still on their way to the buyer or some person on his behalf, and hold them until the price is paid. Where the buyer of goods fails to perform his part of the contract, the seller having a lien on the goods or having stopped them in transit may, after notice, resell them, and the buyer must bear any loss occurring on such resale 5. Special provisions as to sales in execution of decrees are made by the Code of Civil Procedure. Sales for arrears of land revenue are regulated by the local laws dealing with that subject: sales of the property of proclaimed persons who abscond, by the Code of Criminal Procedure, sec. 88. ment of Assignment of contractual rights. As before remarked, the AssignEnglish common law rule as to the non-assignability of a chose contractual in action has never been in force in India. Transfers of debts rights. and other actionable claims are provided for by Act IV of 1882, secs. 130-138, but those sections do not apply to negotiable instruments. As the primary object of bills of exchange and bills of lading is the assignment of money or goods not in the possession of the assignor, the contracts entered into by those who sue, indorse, or accept these instruments appear to fall under the head of 'Alienation.' They will, however, be more conveniently dealt with when we come to consider the Negotiable Instruments Act, 1881. 2. Contracts for permissive use. These are (a) loan for consumption (mutuum), (b) loan for use Permissive (commodatum), (c) letting for hire (locatio conductio). use. consump (a) A loan for consumption takes place when things which are Loan for weighed, counted, or measured (such as wine, oil, corn, money, tion. silver) are delivered to a man on the understanding that he will on a future day return to the person delivering them either the things themselves or their equivalent in kind. Thus, money at a banker's is a loan for consumption to the banker, to be returned when and Loan for use. Letting for hire. as it is called for by cheques. In the absence of special agreement, interest is not usually due upon the loan. Formerly the highest rate of interest was fixed by law; but the usury laws, as they were called, were repealed by Act XXVIII of 18551, which, however, has been held not to affect the Hindú or Muhammadan law as to interest 2. (b) In a loan for use, which is essentially gratuitous, the borrower (commodatarius) must return the identical thing lent, and use it in the meantime in accordance with the terms of the contract. His responsible duty as to taking care of the thing is laid down by the Contract Act (sec. 151). Subject to this provision (which abolishes the English distinctions between the degrees of care required of bailees), he is not liable for wear or tear nor for theft (sec. 152). The lender (commodator) may at any time require the return of the thing, even though he lent it for a specified time or purpose (sec. 159). (c) Letting for hire differs from Loan for use in being for the advantage of both parties, and in England, therefore, a hirer is not bound, in the absence of express stipulation, to exercise the same care as is expected from a borrower. In India, however, the effect of sec. 151 is to make the requisite degree of care identical in both cases. In letting movables no formalities are required; but a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. All other leases of immovable property may be made either by an instrument or oral agreement'. The rights and liabilities of the lessor of immovable property are specified in the Transfer of Property Act, sec. 108, clauses (a) to (d): those of the lessee in the same section, clauses (e) to (g). As to accidental destruction of the thing let, if any material part of the property is destroyed, the lease, at the option of the lessee, becomes void. As to fixtures, the lessee may remove at any time during the continuance of the lease all things which he has attached to the earth; provided he leaves the property in the state in which he received it. As to 1 Some rules intended to prevent usury in the Santál Parganas are contained in Reg. III of 1872, sec. 6, and see the Dekkhan Agriculturists Relief Act, 1879, secs. 13, 14. 2 3 Ben. O. C. J. 130 (contra 5 Ben. 500); 3 Bom. H. C., A. C. J. 23; 7 Bom. H. C., O. C. J. 19; 10 Bom. H. C., 385. As to interest under the Hindú law, see West and B., 3d ed. 746, note (a); 5 Bom. H. C., A. C. J. 196; 9 Bom. 233 Act IV of 1882, sec. 107. In the absence of a special declaration by the Local Government this does not apply to leases for agricultural purposes. Such leases are regulated by local enactments. |