State any 2 rights of surety against the creditor

Under Indian contract law, a surety has certain rights against the creditor to ensure fairness
and protection. Two key rights of the surety against the creditor are:

1. Right to Demand Exhaustion of Principal Debtor’s Liability (Section 140 of the

Indian Contract Act, 1872)

o The surety has the right to insist that the creditor first exhaust all remedies
against the principal debtor before proceeding against the surety.
o If the creditor releases or discharges the principal debtor without the surety’s
consent, the surety is also discharged to the extent of such release.
2. Right to Claim Set-Off or Counterclaim (Equitable Right)

o If the creditor owes any debt or amount to the principal debtor, the surety can
demand that this amount be adjusted (set-off) against the debt for which the
surety is liable.
o This prevents the creditor from unjustly enriching themselves at the expense
of the surety.

These rights ensure that the surety is not unfairly burdened and that the creditor acts in good
faith.

Would you like further clarification on any of these rights?

a. State any 2 rights of surety against the creditor. b. Who can exercise general lien ? c. d. f.
g. h. i. j. State any four kinds of bailment. Define the term “bailor”& “bailee”. e. Explain
partners authority in an emergency. State any two grounds on which the firm can be
compulsorily dissolved. What does “future goods” mean under Sale of Goods Act 1930. State
the circumstances in guarantee becomes invalid. Who is the “principal debtor
Here are the answers to your questions:

a. Two Rights of Surety Against the Creditor

1. Right to Securities (Section 141 of the Indian Contract Act, 1872)

o The surety is entitled to all the securities that the creditor has against the
principal debtor at the time of the contract. If the creditor loses or releases
 these securities without the surety’s consent, the surety is discharged to the
extent of the value of the securities.
2. Right to Discharge if Creditor’s Conduct Prejudices Surety (Section 139)

o If the creditor does any act that is inconsistent with the rights of the surety or
omits to do something required, which ultimately harms the surety, the surety
is discharged.

b. Who Can Exercise General Lien?

 Bankers, Factors, Wharfingers, Attorneys, and Policy Brokers can exercise a

general lien under the Indian Contract Act, 1872 (Section 171).
 A general lien allows them to retain possession of any goods belonging to another
party until all dues (not just related to those goods) are paid.

c. Four Kinds of Bailment

1. Bailment for the exclusive benefit of the bailor (e.g., keeping a friend’s watch for
safekeeping).
2. Bailment for the exclusive benefit of the bailee (e.g., lending a book to a friend).
3. Bailment for mutual benefit (e.g., hiring a car or renting goods).
4. Gratuitous bailment (where no consideration is involved, like borrowing an
umbrella).

d. Define "Bailor" and "Bailee"

 Bailor: The person who delivers goods to another under a contract of bailment.
 Bailee: The person to whom the goods are delivered for a specific purpose.
e. Partner’s Authority in an Emergency

 Under Section 21 of the Indian Partnership Act, 1932, a partner has the authority to
act in an emergency in a way that is necessary to protect the firm from loss.
 Such acts bind the firm, even if they are beyond the usual scope of the partner’s
authority.

f. Two Grounds for Compulsory Dissolution of a Firm

1. Insolvency of all partners or all except one (Section 41).

2. Unlawful business (if the firm’s business becomes illegal due to a change in law).

g. Meaning of "Future Goods" Under the Sale of Goods Act, 1930

 Future goods (Section 2(6)) are goods that are not yet in existence or not yet owned
by the seller at the time of the contract.
 Example: Crops to be harvested, goods yet to be manufactured.

h. Circumstances When a Guarantee Becomes Invalid

1. Misrepresentation or concealment of material facts by the creditor.

2. Discharge of principal debtor without the surety’s consent.
3. Creditor’s act impairing surety’s eventual remedy (e.g., releasing securities).
i. Who is the "Principal Debtor"?

 The principal debtor is the person for whose debt or obligation the surety gives a
guarantee.
 The surety is liable only if the principal debtor defaults.

Would you like any further clarification on these points?

How is a person introduced as a partner in a firm? How is 'goodwill' sold after dissolution of
a firm? Define 'Bailment' as per Indian Contracts Act, 1872. What is the effect of notice to
'acting' partnet? 5. What is 'Continuing guarantee'? Explain with illustration. When does a
Pawnee have a right of retainer? 7. 'Sale by sample' as provided under Sale of Goods Act,
1930? 8. 'Part delivery' under Sale of Goods Act, 1930. 9. Define 'Agent' and 'Sub-agent. 10.
"Document of title to goods"
Here are the answers to your questions in a clear and structured format:

1. How is a Person Introduced as a Partner in a Firm?

Under the Indian Partnership Act, 1932, a new partner can be introduced in the following
ways:

 With the consent of all existing partners (unless the partnership deed allows
otherwise).
 By entering into a new partnership agreement or amending the existing one.
 The new partner is liable only for debts incurred after admission, unless agreed
otherwise.

2. How is 'Goodwill' Sold After Dissolution of a Firm?

  Goodwill (the firm’s reputation and brand value) is treated as an asset.
 It can be sold either:

o Separately (to a third party).

o Along with other assets during dissolution.
 The proceeds are distributed among partners as per their profit-sharing ratio.

3. Define 'Bailment' as per Indian Contract Act, 1872

 Bailment (Section 148): A contract where one person (bailor) delivers goods to
another (bailee) for a specific purpose, with the understanding that the goods will be
returned or disposed of as per the bailor’s directions.
 Example: Giving a car for repair (bailee must return it after servicing).

4. What is the Effect of Notice to an 'Acting' Partner?

 Notice given to one acting partner is considered notice to the entire firm (Section
24, Indian Partnership Act).
 This means all partners are legally bound by the information, even if not individually
informed.

5. What is a 'Continuing Guarantee'? Explain with Illustration.

 Definition (Section 129): A guarantee that covers a series of transactions, not just a
single one.
 Example: A bank guarantee for a business’s recurring credit purchases. The surety
remains liable for all transactions until revoked.
 Revocation: Can be withdrawn for future transactions by notice to the creditor.
6. When Does a Pawnee Have a Right of Retainer?

 Right of Retainer (Section 173): A pawnee (lender) can retain the pledged goods
until:

1. The debt is repaid.

2. Interest and other charges are paid.
3. Any other dues linked to the pledge are cleared.

7. 'Sale by Sample' Under the Sale of Goods Act, 1930

 Definition (Section 17): A sale where goods are contracted to match a sample shown
to the buyer.
 Conditions:

o Bulk must correspond with the sample.

o Buyer gets a reasonable chance to compare.
o Goods must be free from defects (not apparent in the sample).

8. 'Part Delivery' Under the Sale of Goods Act, 1930

 Definition (Section 34): When only a portion of the goods is delivered, it may be
treated as delivery of the whole if:

o The parties intend it to transfer ownership.

o The remaining goods are to be delivered later.

9. Define 'Agent' and 'Sub-agent'

  Agent (Section 182): A person employed to act on behalf of another (principal) in
dealings with third parties.
 Sub-agent (Section 191): A person appointed by the agent to perform part of the
agency’s duties (with or without the principal’s consent).

10. "Document of Title to Goods"

 Definition (Section 2(4), Sale of Goods Act): A document that:

o Represents ownership of goods (e.g., bill of lading, warehouse receipt).

o Allows transfer of goods by endorsement or delivery.

Would you like any further elaboration on these points?

a. Who can make a valid pledge? b. Write any two difference between contract of guarantee
and indemnity. c. What do you mean by bailee? d. Is the registration of Partnership firm
Compulsory? e. Give any two modes of the discharge of the surety. f. What is agency by
ratification? g. Define Indemnity. h. Give any two duties of bailor. 1. Define Pledge. j. Give
any two modes of dissolution of Partnership Firm.
Here are the concise answers to your questions:

a. Who can make a valid pledge?

 The owner of goods or a person authorized by the owner (Section 178, Indian
Contract Act, 1872).
 Mercantile agents (like pawnbrokers) can pledge goods if they have possession with
the owner’s consent.

b. Two Differences Between Contract of Guarantee and Indemnity

Guarantee (Section 126) Indemnity (Section 124)

Three parties: Principal debtor, creditor, Two parties: Indemnifier (promisor) and
Guarantee (Section 126) Indemnity (Section 124)

surety. indemnity holder (promisee).

Secondary liability (surety pays only if Primary liability (indemnifier must compensate
the principal debtor defaults). loss regardless of default by another).

c. What do you mean by bailee?

 Bailee (Section 148): The person who receives goods from the bailor for a specific
purpose under a contract of bailment (e.g., a repair shop keeping your phone for
servicing).

d. Is the registration of a Partnership firm compulsory?

 No, registration is not compulsory under the Indian Partnership Act, 1932. However,
an unregistered firm cannot sue third parties or partners for claims.

e. Two Modes of Discharge of Surety

1. Revocation by notice (for future transactions in a continuing guarantee).

2. Creditor’s act impairing surety’s rights (e.g., releasing the principal debtor without
consent).

f. What is agency by ratification?

 When an unauthorized act is performed by an agent, and the principal later

approves it, making it binding (Section 196–200, Indian Contract Act).
 Example: An employee buys office supplies without authority, but the employer
agrees to pay later.

g. Define Indemnity

 Indemnity (Section 124): A contract where one party promises to compensate

another for losses caused by the promisor’s actions or a third party’s actions.

h. Two Duties of Bailor

1. Disclose known defects in goods (Section 150).

2. Repay necessary expenses incurred by the bailee for maintaining the goods.
i. Define Pledge

 Pledge (Section 172): A bailment of goods as security for a debt or promise. The
pledgor (borrower) delivers goods to the pawnee (lender) as collateral.

j. Two Modes of Dissolution of Partnership Firm

1. By agreement (all partners consent).

2. Compulsory dissolution (e.g., insolvency of all partners or unlawful business).

Let me know if you'd like further clarification!

1. State the essentials of partnership. 2. Who is a sub-agent? 3. What is the difference
between a condition and warranty under the Sale of Goods Act,1930? 4. What rights does a
pawnee have after pawnor's default? 5. State the difference between sale and agreement to
sell. 6. When are goods said to be in a deliverable state? 7. State any two rights and dut.ies of
a partner. 8. Define contract of guarantee. 9. What does `future goods' mean under the Sale of
Goods Act,1930? 10. What is the extent of an agent's authority?
1. Essentials of Partnership

Under the Indian Partnership Act, 1932 (Section 4), a partnership requires:

 Two or more persons (maximum 50 for non-banking firms).

 Agreement (written or oral) to share profits.
 Business carried on by all or any acting for all (mutual agency).
 Lawful purpose (illegal agreements are void).

2. Who is a Sub-agent?

 Sub-agent (Section 191, Indian Contract Act, 1872): A person appointed by

an agent (with or without the principal’s consent) to perform part of the agency’s
duties.
 Liability: If properly appointed, the principal is bound by the sub-agent’s acts.
3. Difference Between Condition & Warranty (Sale of Goods Act, 1930)

Condition (Section 12(2)) Warranty (Section 12(3))

Fundamental to the contract (breach allows Collateral to the contract (breach only allows
termination + damages). damages, not termination).

Example: Buying a fridge that doesn’t cool Example: Buying a fridge with a scratch (still
at all. functions).

4. Rights of Pawnee After Pawnor’s Default (Section 176)

 Sell the pledged goods after reasonable notice.

 Sue for the debt if sale proceeds are insufficient.
 Retain goods as collateral until the debt is repaid.

5. Difference Between Sale & Agreement to Sell

Sale (Section 4(3)) Agreement to Sell (Section 4(4))

Ownership transfers immediately to the Ownership transfers later (on fulfillment of

buyer. conditions).

Buyer bears risk of loss. Seller bears risk until ownership transfers.

6. Goods in a Deliverable State (Section 2(3))

Goods are in a deliverable state when:

 They are fit for immediate delivery in the ordinary course.

 Buyer would be bound to take delivery (e.g., packaged, tested).
7. Two Rights & Duties of a Partner

Rights:

1. Right to share profits (as per the agreement).

2. Right to participate in management.

Duties:

1. Duty to act in good faith (no secret profits).

2. Duty to indemnify firm for fraud or negligence.

8. Contract of Guarantee (Section 126)

A contract where:

 A surety promises to perform if the principal debtor defaults.

 Three parties: Creditor, Principal Debtor, and Surety.
 Example: Bank loan guaranteed by a third party.

9. Future Goods (Section 2(6))

 Goods not yet in existence (e.g., crops to be harvested).

 Goods not yet owned by the seller at the time of contract.

10. Extent of Agent’s Authority

 Express Authority: Acts specifically permitted by the principal.

  Implied Authority: Acts incidental to the agency (e.g., a sales agent can negotiate
prices).
 Emergency Authority (Section 189): Acts to protect the principal’s interests in
urgent situations.

Let me know if you need further elaboration!

1. Define seller under sale of goods act 1930? 2. Who is considered as nominal Partner? 3.
What is a role of Surety? 4. Define contract of agency? 5. Define partnership firm? 6. Who is
considered as indemnity Holder? 7. What is warranty under sale of goods Act? 8. What do
you mean by agreement to sell? 9. Who 1s a Minor Partner ? 10 Define Pledge?
Here are the precise answers to your questions based on Indian commercial laws:

1. Seller under Sale of Goods Act, 1930 (Section 2(13))

A seller is a person who:

 Transfers or agrees to transfer property (ownership) in goods

 May be either the owner or someone authorized by the owner
 Includes both immediate sellers and those who agree to sell in future

2. Nominal Partner (Indian Partnership Act, 1932)

A nominal partner is one who:

 Lends their name to the firm

 Does not contribute capital
 Does not share profits
 Is liable to third parties as they hold themselves out as partners
 Also called "partner by estoppel"

3. Role of Surety (Indian Contract Act, 1872, Section 126)

A surety:

 Guarantees the performance of the principal debtor's obligation

  Is secondarily liable (pays only if principal debtor defaults)
 Has rights against creditor, principal debtor, and co-sureties
 Must be compensated (except in gratuitous guarantees)

4. Contract of Agency (Indian Contract Act, 1872, Section 182)

A contract where:

 One person (the principal) authorizes another (the agent)

 To act on their behalf in dealings with third parties
 All lawful acts of the agent bind the principal
 May be express or implied

5. Partnership Firm (Indian Partnership Act, 1932, Section 4)

A partnership firm is:

 The collective name under which business is carried on by partners

 Not a separate legal entity (except for tax purposes)
 Comprising 2-20 partners (10 for banking business)
 Governed by partnership agreement

6. Indemnity Holder (Indian Contract Act, 1872, Section 124)

The indemnity holder is:

 The person who receives the promise of protection

 Entitled to compensation for losses covered by the contract
 Protected against losses caused by promisor or third parties
 Example: Insurance policy holder

7. Warranty under Sale of Goods Act (Section 12(3))

A warranty is:

 A collateral stipulation in a contract of sale

 Breach gives right to claim damages but not to reject goods
 May be express or implied
 Example: Warranty that goods are free from defects
8. Agreement to Sell (Sale of Goods Act, Section 4(3))

An agreement to sell is:

 A contract where transfer of property is to happen at future time

 Or subject to conditions to be fulfilled later
 Becomes sale when conditions are met
 Risk remains with seller until property transfers

9. Minor Partner (Indian Partnership Act)

A minor partner:

 May be admitted to benefits of partnership with consent of all partners

 Has right to share profits and inspect accounts
 Is not personally liable for firm's debts
 Must decide within 6 months of attaining majority whether to become full partner

10. Pledge (Indian Contract Act, Section 172)

A pledge is:

 A bailment of goods as security for payment of debt

 Pawnee (lender) gets possession but not ownership
 Pawnee has right to sell on default after notice
 Example: Pawning gold jewelry for loan

Each definition includes the relevant legal section reference for authoritative support. Let me
know if you would like any particular concept explained in more detail.