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partnership was to last for two years, and the Court awarded the plaintiff what would have been his share of one year's profits.

6. Negative Service.

Contracts for negative service, in which one party promises to abstain from certain acts, are dealt with by the Contract Act, secs. 26, 27, and 28. They are still more grudgingly recognised by the Indian than by the English law. Thus, by sec. 27 an agreement by an adult not to marry a specified person would be void. Under sec. 27 agreements by commercial travellers not to travel in certain districts, and agreements by clerks and apprentices not to carry on their masters' trades, are void. And it has been ruled that an agreement in restraint of trade, to be performed in British India, entered into in England, though valid by the lex loci contractus, is void in India unless it comes within one of the three exceptions to sec. 271.

7. Aleatory Gain.

(a) Wagers. Agreements for the payment of money or transfer Wagers. of other property on the occurrence of a specified uncertain event are also discouraged, unless when made for commercial objects, or to insure against death or fire. Thus, by the Contract Act, sec. 30, all agreements by way of wager are void, except agreements to subscribe to a prize of Rs. 500 or upwards to be given to the winner of a horse-race 2. To constitute a wager the transaction must 'wholly depend on the risk in contemplation,' and neither party must look to anything but the payment of money on the determination of an uncertainty. But if one of them has 'the event in his own hands,' the transaction is not a wager 3.

(b) Lotteries are illegal under the Penal Code, sec. 294. But a Lotteries. transaction is not necessarily a lottery because a matter of whatever kind is agreed to be decided by lot. Where, therefore, twenty persons agreed that each should subscribe Rs. 200 by monthly instalments of Rs. 10, and that each in his turn as determined by lot should take the whole of the subscriptions for one month, this agreement was not illegal *.

(c) Annuities. The Indian Code, unlike the French, contains no Annuities. provision as to an agreement to pay an annuity so long as A lives.

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Bottomry.

Respondentia.

Insurance.

Under the Code Civil, § 1968, such agreement is void if the person on whose life it depends is ill at the time it is made, and dies of the same illness within twenty days.

(d) Bottomry is a loan to a shipowner secured on the hull, to be repaid only in case a voyage ends successfully. The Indian statutebook is silent as to this contract, except in illustration f to sec. 425 of the Penal Code, and in the Stamp Act, sec. 29 (a), and Sched. I, No. 15. The High Court at Calcutta has ruled that the master's claim for wages is prior to that of the bottomry bondholder'. (e) Respondentia is a similar loan to a shipowner, but it is secured on the cargo. The Indian statute-book is silent as to this contract, except in the Stamp Act, sec. 29 (a), and Schedule I, No. 55(ƒ) Insurance is defined as ‘a contract by which one party, in consideration of a premium, engages to indemnify another against a contingent loss, by making him a payment in compensation if, or when, the event shall happen by which the loss is to occur??

Marine insurance is specially noticed in three Indian Acts, namely, V of 1866, which empowers the assignee of a policy to sue in his own name; I of 1879, sec. 66, which imposes a penalty for not drawing the full number of policies when they purport to be in sets; and XV of 1882, sec. 19 (7), which excludes suits on policies from the jurisdiction of the Presidency Courts of Small Causes.

Questions relating to marine insurance have often come before the High Courts when the parties were Europeans; and when the defendants, underwriters of a policy of insurance on goods on board a vessel bound from Bombay to Calcutta, were Hindús, but no principle of Hindú law was applicable, and the contract was expressed in English, the English law was held to apply. The native merchants of Kachh-Mandrí and Bombay trade with the ports of Madagascar and East Africa by means of native vessels, which leave the Indian ports early in the year and return in August or September. This trade consists in shipping goods at the Indian ports to be disposed of at the African and Madagascar ports, and purchasing with the proceeds fresh goods to be disposed of in the Indian ports. The traders borrow money of merchants on avung, i. e. on condition that it is not to be repaid except in case of the safe arrival in India of the goods bought in Africa, in which event the loan becomes repayable

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with interest at a high rate. This does not give the lender a charge on these goods; but he has an insurable interest in them 1. Fire-insurance is specially noticed by Act V of 1866, sec. 15, Fire-insurwhich empowers the assignee of a policy to sue thereon in his own name; Acts XXVIII of 1886, sec. 17, and IV of 1882, secs. 69, 72, which declare the mortgagee's right to insure mortgaged property; Act IV of 1882, sec. 76 (ƒ), which directs how money received by the mortgagee under the policy is to be applied; and the same Act, sec. 49, which declares the right of the transferee of immovable property insured against loss or damage by fire to require the transferor to apply the insurance-money in reinstating the property. There are also local provisions that damage done by the fire-brigade shall, for the purpose of the policy, be considered damage by fire. The practice of insuring against damage by floods, drought, or hail, has not, so far as I know, been introduced into India.

Life-insurance. As to this the only statutory provisions are Life-insurthose contained in Act III of 1874, secs. 5 and 6, which authorise ance. a married woman to effect a policy on her own behalf and independently of her husband, and declare that a policy effected by a married man on his own life and expressed to be for the benefit of his wife or of his wife and children, shall be deemed a trust for her or their benefit. But these provisions do not apply to women who at the time of their marriage were Hindús or Muhammadans, or whose husband was then a Hindú or Muhammadan (sec. 2). The right of insuring without any interest in the risk insured against is not restricted in India, the English statutes, 9 Geo. II, c. 37, and 14 Geo. III, c. 48, not extending to that country.

The stamps on policies generally are regulated by Act I of 1879; the limitation of time for suits on policies by Act XV of 1877, Sched. II, Nos. 86 and 87: forms of plaints in suits arising out of policies are given in the Civil Procedure Code, Sched. IV, Nos. 49-54; and provisions as to insurance-companies are contained in Act VI of 1882, secs. 3, 6, 61, 130, 131, 225, and the local Madras Act VI of 1869.

Having thus noticed the seven classes of principal contracts which are made in India, we now proceed to consider the chief contracts entered into for the purpose of creating rights which are to be merely ancillary to other rights.

II. ANCILLARY CONTRACTS.

I. Guarantee.

The chief rules relating to this matter (sometimes called surety- Guarantee.

1 4 Bom. 305.

ship) are found in the Contract Act, chapter VIII. The contract of guarantee is defined (sec. 126) as 'a contract to perform the promise, or discharge the liability, of a third person in case of his default.' The Act does not say that the promise' and 'liability' here referred to must be legally enforceable, and it might therefore be argued that in India, as in France, there may be a good guarantee of a promise made by a minor. But the use of the expressions' principal debtor' for the person in respect of whose default the guarantee is given, and 'creditor' for the person to whom it is given, and contract' between the principal [debtor] and creditor (sec. 133), shows that the Indian legislature did not intend to depart from the English doctrine that the obligation of the principal must not be merely a natural one. The surety's liability is coextensive with that of the principal debtor, unless it is otherwise provided by the contract 1. It may, therefore, be less than that of the principal debtor, but no doubt it would be held (though the Act does not say so) that it may not be greater. As regards transactions occurring before his death, the surety's liability devolves on his representatives; but, in the absence of a contract to the contrary, his death revokes a continuing guarantee, so far as regards future transactions (sec. 131).

As between the surety and the creditor, the surety is discharged by the various acts, which alter or extinguish the principal debtor's liability, or impair the surety's eventual rights. Mere forbearance on the creditor's part does not discharge the surety (sec. 137). But as a rule the acceptance of interest in advance by the creditor operates as giving time to the principal debtor, and consequently as a discharge to the surety. The surety may be sued, though the principal debtor has not been sued, or though the surety himself had begun to perform that for the non-performance of which he has made himself liable.

As between the surety and the principal debtor, when the latter has made default and the surety has in consequence discharged the obligation, he is invested with all the rights which the creditor had against the principal debtor. The surety is also entitled on an implied contract to be indemnified by the principal debtor. As between several sureties, one who discharges the debt for

1 Sec. 128.

2 Secs. 133, 134, 135.

3 Sec. 139.

4 4 Cal. 134, and see 6 Cal. 241 as to the liability of an accommodation acceptor of hundís who knew that the drawer had paid advance interest

to the holder to obtain time for pay. ment after due date.

57 Mad. H. C. 368. And see 4 Mad. H. C. 190, where it is said that this is not opposed to Hindú law. 6 Secs. 140, 141. 7 Sec. 145.

which all are jointly liable is entitled to contribution from the others. A release of one co-surety does not discharge the others, nor does it free him from his responsibility to the others 2.

A guarantee given in respect of the transaction of a firm is revoked as to future transactions by change in its constitution3.

The contract is not a formal one in India. In England, by the Statute of Frauds, a guarantee must be in writing, but the Indian Contract Act, sec. 126, expressly declares that a guarantee may be either oral or in writing*. As to oral evidence of a guarantee, see 2 N. W. P. 210.

Questions relating to guarantee have often come before the Indian Courts 5.

As to what are called 'companies limited by guarantee,' see Act VI of 1882, sec. 9.

2. Indemnity.

This contract is defined as a contract by which one party pro- Indemnity. mises to save the other from loss caused to him by the conduct of the promiser himself, or by the conduct of any other person."

It may be express or implied. In every contract of guarantee there is an implied promise to indemnify the surety 7; in every contract of agency there is an implied promise to indemnify the agent if he acts in good faith (sec. 223). The following are other cases in which it would be implied:

(a) A an unpaid seller of goods, who has parted with their possession, hearing that B the buyer is insolvent, stops the goods while they are in transit to B. B turns out to be solvent; A must indemnify B for expenses incurred by the stoppage.

(b) A assigns to B his interest under a lease. B fails to perform the contracts binding on the lessee, and the lessor consequently compels A to perform them. B must indemnify A for the expenses of performance as well as for his costs reasonably incurred in resisting, reducing, or ascertaining the claim made against him by the lessor. The rights of the promisee are set out in sec. 125; but by an unaccountable omission nothing is said of the rights of the promisor. He would probably be held entitled, on performing his 1 Sec. 146; see sec. 43. * Sec. 138.

3 Sec. 260. It had been ruled that a contract of guarantee by a Hindú was not affected by the Statute of Frauds, sec. 4; 5 Ben. 639, 643.

5 See, for instance, I Bom. H. C. A. C. J., 135; 7 Bom. H. C., A. C. J. 118; 3 N. W. P. 106; 6 N. W. P. 170. See also 9 Cal. 355.

6 Contract Act, sec. 145, and see
sec. 159 as to the liability of the
lender of a thing for use for a specified
time who recalls it before the time
expires, and sec. 164 as to the liability
of a bailor where the bailee sustains
loss from the bailor's want of title.
7 Code Civil, art. 2012.

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