The Contract of Insurance is a contract whereby a person undertakes to indemnify another against a loss arising on the happening of an event or to pay a sum of money on the happening of an event. The person who insures is called “Insurer”. The person who effects the insurance is called the “Insured” or “Assured”. The price for the risk undertaken by the insurer and paid by the insured to the insurer is called “Premium” and the document which contains the contract of insurance is called “Policy”. Following are the general principles of contract of insurance: Uberrimae Fidei: A contract of insurance is a contract uberrimae fidei, i.e. a contract requiring utmost good faith of the parties. So, all material facts which are likely to influence the insurer in deciding the amount of premium payable by the insured must be disclosed by the insured. Failure to disclose material facts Continue reading
Mercantile Law
Offer and Acceptance
One of the early steps in the formation of contract lies in arriving at an agreement between the contracting parties by means of offer and acceptance. One party makes a definite proposal to the other, and that other accepts it in its entirety. Offer An offer is also called a proposal. Sec.2 (a) of the Indian Contract Act defines a proposal as, “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”. The person making the proposal is called the “proposer”, or “offeror” and the person to whom the proposal is made is called the “offeree”. Essentials of Valid Offer It must contain definite, unambiguous and certain and not loose and vague terms. It must intend to give rise to legal relationship. Continue reading
Crossing of Cheques
Crossing means drawing two parallel transverse lines across the face of the cheque with or without the words “and company” in between the lines. It is a direction to the drawee bank not to pay the amount at the counter, but only through a bank. It is made to guard payment against forgery by unscrupulous persons. Crossing of cheques is of two kinds: (1) General Crossing and (2) Special Crossing. 1. General Crossing Sec. 123 of the Negotiable Instruments Act defines General Crossing as, “where a cheque bears across its face an addition of the words ‘And Company’ or any abbreviation thereof, between two parallel transverse lines or of two parallel transverse lines simply, either with or without the words ‘not negotiable’, that addition shall be deemed to be a crossing and the cheque shall be deemed to be crossed generally”. Two parallel transverse lines across the face of the Continue reading
Difference between Sale and Agreement to Sell
Section 4(1) of the sale of Goods Act defines a contract of sale of goods as — “a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price”. The definition of contract of sale of goods reveals that either actual sale or an agreement to sell both are covered under the act. But, there are certain differences between the two. Where in a contract of sale, the property in the goods is immediately transferred from the buyer to the seller it is called a sale. Where under a contract of sale, the transfer of property in the goods is to take place in the future or after the fulfillment of certain conditions, it is called ‘An agreement to sell”. A sale and an agreement to sell can be distinguished as:- i) Transfer of Property (Ownership): In a sale, the property in Continue reading
Damages for Breach of Contract
Damages are a monetary compensation allowed to the injured party by the Court for the loss or injury suffered by him by the breach of a contract. The object of awarding damages for the breach of contract is to put the injured party in the same position, so far as money can do it, as if he had not been injured, i.e. in the position in which he would have been had there been performance and not breach. This is called the doctrine of restitution. The rules relating to damages may be considered as under: 1. Damages arising naturally – Ordinary damages When a contract has been broken, the injured party can recover from the other party such damages as naturally and directly arose in the usual course of things from the breach. This means that the damages must be the proximate consequence of the breach of contract. These damages Continue reading