SECTION

206

207

Notice of revocation or renunciation
Revocation and renunciation may be expressed or implied
When termination of agent's authority takes effect as to agent, and as to

third persons :
Agent's duty on termination of agency by principal's death or insanity
Termination of sub-agent's authority

208 209 210

.

AGENT'S DUTY TO PRINCIPAL.

211

.

212

213 214

.

215

Agent's duty in conducting principal's business
Skill and diligence tequired from agent .
Agent's accounts
Agent's duty to communicate with principal
Right of principal when agent deals, on his own account, in business of

agency without principal's consent
Principal's right to benefit gained by agent dealing on his own account

in business of agency
Agent's right of retainer out of sums received on principal's account
Agent's duty to pay sums received for principal
When agent's remuneration becomes due
Agent not entitled to remuneration for business misconducted
Agent's lien on principal's goods and papers

216 217 218 219 220

221

PRINCIPAL'S DUTY TO AGENT.

222

Agent to be indemnified against consequences of lawful acts
Agent to be indemnified against consequences of acts done in good

faith
Non-liability of employer of agent to do a criminal act
Compensation to agent for injury caused by principal's neglect

223 224 225

EFFECT OF AGENCY ON CONTRACTS WITH THIRD PERSONS.

Enforcement and consequences of agent's contracts .
Principal how far bound, when agent exceeds authority .
Principal not bound when excess of agent's authority is not separable
Consequences of notice given to agent
Agent cannot personally enforce, nor be bound by, contracts on behalf of

principal.
Presumption of contract to contrary
Rights of parties to a contract made by agent not disclosed
Performance of contract with agent supposed to be principal .
Right of person dealing with agent personally liable
Consequence of inducing agent or principal to act on belief that principal

or agent will be held exclusively liable
Liability of pretended agent
Person falsely contracting as agent, not entitled to performance
Liability of principal inducing belief that agent's unauthorised acts were

authorised
Efect, on agreement, of misrepresentation or fraud by agent

230

ib. 231 232 233

.

234 235 236

CHAPTER XI.

OF PARTNERSHIP.

SECTIOS

.

240

.

.

.

.

.

.

Partnership’defined

239 Firm' defined

3. Lender not a partner by advancing money for share of profits. Property left in business by retiring partner, or deceased partner's representative.

241 Servant or agent remunerated by share of profits, not a partner

242 Widow or child of deceased partner receiving annuity out of profits, not a partner,

243 Person receiving portion of profits for sale of good-will, not a partner 244 Responsibility of person leading another to believe him a partner.

245 Liability of person permitting himself to be represented as a partner 246 Minor partner not personally liable, but his share is

247 Liability of minor partner on attaining majority

248 Partner's liability for debts of partnership

249 Partner's liability to third person for neglect or fraud of co-partner 250 Partner's power to bind co-partners

251 Annulment of contract defining partners' rights and obligations

252 Rules determining partners' mutual relations, where no contract to contrary.

253 When Court may dissolve partnership

254 Dissolution of partnership by prohibition of business

255 Rights and obligations of partners in partnership continued after expiry of term for which it was entered into

256 General duties of partners

257 Account, to firm, of benefit derived from transaction affecting partner

ship Obligations, to firm, of partner carrying on competing business

259 Revocation of continuing guarantee by change in firm Non-liability of deceased partner's estate for subsequent obligations Payment of partnership-debts, and of separate debts

258

· 260

261

ACT No. IX OF 1872.

PASSED BY THE GOVERNOR GENERAL OF

INDIA IN COUNCIL.

(Received the assent of the Governor General on the 25th April,

1872.)

The Indian Contract Act, 1872.

Whereas it is expedient to define and amend certain parts Preamble. of the law relating to contracts 1; It is hereby enacted as follows:

PRELIMINARY. 1. This Act may be called “The Indian Contract Act, Short title. 1872. It extends to the whole of British India ; and it shall come Extent.

Commenceinto force on the first day of September, 1872 2.

ment. The enactments mentioned in the schedule hereto are re- Enact

ments pealed to the extent specified in the third column thereof; but

repealed. nothing herein contained shall affect the provisions of any Statute 3, Act *, or Regulation 5 not hereby expressly repealed,

The Act is and purports to be Calcutta): 17 & 18 Vic. c. 104. only a partial measure, 3 Bom, 113: sec. 544, as to contracts with lascars 10 Cal. 18

or native seamen: 21 & 22 Vic, c. ? i.e. as to contracts entered into, 106. secs. 39, 67, as to contracts of after that day. That Act IX of 1872 the late E. I. Company, ibid. sec. 40: has no retrospective effect, see 12 Ben. contracts of the Secretary of State 438 : 5 Moo. I. A. 109, 127,

in Council, ibid. sec. 40, and 22 & 23
For instance, 21 Geo. III. c. 70. Vic, C. 41. ss. 2, 5.
sec. 17, and 37 Geo. III. c. 142. sec. 13, * See, for instance, Acts XXXII
which leaves suits in the late Supreme of 1839 (interest), XXVIII of 1855
Courts on contracts 'where only one (usury), IX of 1856 (bills of lading),
of the parties shall be a Muhamma- XIII of 1859 (breaches of contract
dan or Gentu' to be determined by by artificers, etc.), XLV of 1860,
the laws and usages of the defendanť chap. xix, supra p. 279, III of 1865
(see 5 Ben, 639, 643: 12 Suth., App. (common carriers), and the other

J. i1: but in 14 Ben. 76, 85 Acts mentioned in the note to sec. 10
Couch C.J, ruled that, notwith- infra.
standing 21 Geo. III. c. 70, the 5 There seem no unrepealed Regu-
Contract Act applies to Hindús in lations which this clause would save,

nn

1

VOL. I.

nor any usage or custom of trade, nor any incident of any

contract, not inconsistent with the provisions of this Act”. Inter- 2. In this Act the following words and expressions are used pretation in the following senses, unless a contrary intention appears clause

from the context:Proposal.' (a.)-When one person signifies to another his willingness

to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he

is said to make a proposal : • Promise, (6.)—When the person to whom the proposal is made signi

fies his assent thereto, the proposal is said to be accepted. A

proposal, when accepted, becomes a promise * : Promisor' (c.) The person making the proposal is called the promisor,

— and pro- and the person accepting the proposal is called the 'promisee :'

. "Consider- (d.)— When, at the desire of the promisor, the promisee or ation.' any other person has done or abstained from doing, or does

5 or abstains from doing, or promises to do or to abstain from doing, something ®, such act or abstinence or promise is called a consideration for the promise?:

5

1 e.g. the customary law relating
to common carriers, 10 Cal. 184, 185
(dissenting from 3 Bom. 109)the
rules relating to the liens of attorneys,
6 Cal. I: the rule of Hindú law
(dámdupat) that arrears of interest
exceeding in amount the principal
debt are not recoverable at any one
time, 9 Bom. H. C. 83: 1 Bom.
H. C., A.C.J. 47: 3 ibid. 25: 9 ibid.
83: but see i Cal. 92. In 5 Cal. 868
Wilson J. thought the rule that
'arrears of interest more than suffi-
cient to double the debt are not
recoverable' one of limitation rather
than of contract.

But the custom must be reasonable :
the courts therefore will not enforce
a custom allowing a broker to deviate
from his instructions, 8 Bom. H. C.,
A. C. J. 19.

As to the origin and binding force of customary law, see 3 Mad. H. C. 50, per Holloway J. And as to the evidence necessary to establish a valid custom or usage, 4 Bom. H. C., A. C. J. 113: 11 Bom. 270.

2 The words not inconsistent' etc. apply to any usage or custom of

trade,' as well as to “any incident of any contract,' 14 Ben. 76, 84, 85. Quaere therefore whether the rule that the obligation on a bill of exchange or promissory note may be raised without consideration is still in force in India.

3 See also the General Clauses Act, supra, p. 487.

According to this definition, taken with that of proposal, the scope

of promises is confined to conduct on the part of the promisor.

4 Mad. 137 (when A granted a share in a zamindårí to B and directed Bto make an annual payment to C, and B, by a contemporaneous agreement with C, promised to carryout A's direction),6 Mad. 354, 355. For an instance in which an expenditure was held not to be a consideration, see 3 All

. 221. 6 Words are wanted to show that the consideration must be of some value. The following are suggested : "and the promisee or such other person did or does thereby undertake some burden or lose some thing which in contemplation of law may be of value.' See Pollock, Contract, 167.

? The Indian Act keeps the doubt

ment.'

agree

(e.)—Every promise and every set of promises, forming the ' Agreeconsideration for each other, is an agreement :

(f.)—Promises which form the consideration or part of the 'Reciconsideration for each other, are called reciprocal promises :

procal

promises.' (9.)-An agreement not enforceable by law is said to be 'Void void :

ment.' (h.)—An agreement enforceable by law is a contract : *Contract.'

(i.)- An agreement which is enforceable by law at the Voidable option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract :

(3.)—A contract which ceases to be enforceable by law be- 'Void comes void when it ceases to be enforceable 1.

contract.'

a