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Important MCQs on Contract act, 1872

Q.1 When the consent to an agreement is obtained by undue influence, the agreement is voidable
at the option of

1. either of the parties to the agreement
2. a party whose consent is obtained
3. a party who obtained the consent
4. none of the above

Q.2 a Contingent Contract to do or not to do anything on the happening of an uncertain future

1. is never enforceable
2. is enforceable since the time of making it
3. becomes enforceable in the immediate possibility of happening of that event
4. becomes enforceable only on the happening of that event.

Q.3 No contract can arise, if the -

1. offer is not made to an ascertained person
2. acceptance is made by an unascertained person
3. offer is made to an ascertained person
4. acceptance is made by an ascertained person.

Q.4 Vindictive Damages have been awarded -

1. for a breach of promise to marry;
2. for wrongful dishonour of a cheque by a banker possessing adequate funds of the customer.
3. Either (1) or (2)
4. Both (1) and (2)

Q.5 Communication of a proposal is complete when it comes to the knowledge of the person to
whom it is made.

1. True
2. Partly True
3. False
4. None of the above.

Q.6 Mere silence is not fraud unless -

1. the silence is deceptive
2. there is a change in the circumstances to be brought to the notice of other party
3. there is a duty to speak
4. all the above.

Q.7 When two or more persons have made a joint promise, then, unless a contrary intention
appears from the contract, all such persons must fulfill the promise

1. jointly
2. severally
3. jointly and severally
4. jointly or severally.

Q.8 Where a contract consists of reciprocal promises and such reciprocal promises are to be
simultaneously performed -

1. Promisor need not perform his part of promise at all
2. Promisor need not perform his part of promise unless Promisee is ready and willing to perform
his reciprocal promise
3. Promisor has to compel Promisee to perform his promise first
4. There is no valid contract at all.

Q.9 In case of breach of contract of sale of sorne rare article or thing for which there is no
substitute in the market, the Court may grant -

1. Quantum Meruit
2. Rescission
3. Specific Performance
4. Injunction.

Q.10 A Minor's agreement is void. This was held in the case of

1. Mohiri Bibee Vs.Dharmadas Ghosh
2. Nihal Chand Vs. Jan Mohamcd Khan
3. Suraj Narain Vs.Sukhu Aheer
4. Chinnaiya Vs. Ramaiya

Q.11 In case of anticipatory breach, the damages will be assessed -

1. From the date on which the breach occurred
2. From the promised date of performance
3. From the date the Court instructs
4. From the date as desired by the promise

Q.12 M. by a Gift deed transferred certain property to her daughter, with a direction that
daughter should pay an annuity to M's brother, as had been done by M. On the same day, the
daughter executed a deed in writing in favour of M's brother, agreeing to pay annuity.
Afterwards, she declined to fulfil her promise saying that no consideration had moved from her
uncle. Which of the following statements is correct'?

1. The daughter is bound to pay annuity.
2. There is no valid consideration in this contract.
3. M's brother is a third party to the contract and cannot suc.
4. The daughter is not bound to pay annuity.

Q.13 To be covered under misrepresentation, statement must be wrong, but the person making it
believed it to be true.

1. True
2. Partly True
3. False
4. None of the above

Q.14 An Executory Consideration is -

1. Consideration promised by executive of a Company
2. Consideration which consists simply of a mutual exchange of promise each being a
consideration for the other
3. Consideration which should be executed on the future date
4. Consideration which should be executed before the Court.

Q.15 Offering the relief by way of specific performance of contract is :

1. At the discretion of the Court
2. right of a person and court must give it
3. Provided in the Contract Act
4. both (2) and (3)

Q.16 When a contract is divisible, and one party has enjoyed the benefit of part performance,
then, the other party may sue on quantum merit, it is

1. False
2. Partly True
3. True
4. Partly False

Q.17 'Privity of Contract' is subject to the exception .

1. Where a trust or charge is created
2. Where payment is made to a third party
3. Where payment is made by a third party
4. None of the above

Q.18 The mother owes Rs. 10,000 to her daughter. But this debt has become barred by the
Limitation Act. The mother signs a written promise to pay Rs. 3,000 on account of the debt. In
this case which one of the following is correct ?

1. There is no contract as the debt is already barred by limitation and so it cannot be revived by a
subsequent promise.
2. There is no contract because the mother has promised to give only a part of time - barred debt.
3. This is enforceable against the mother because such a promise is valid and binding under the
Indian Contract Act.
4. None of the above

Q.19 A Quasi - contract under Indian contract Act

1. Is an agreement
2. Is a contract
3. Has only a legal obligation
4. None of these

Q.20 X' out of natural love and affection promises to give his newly wedded daughter-in-law a
golden necklace worth Rs. 20,000, 'X' made the promise in writing and signed it and delivered
the same to the daughter-in-law. This is :

1. Valid
2. Without consideration
3. Unenforceable
4. Voidable

Q.21 A contingent contract dependent on the non-happening of specified uncertain event within
fixed time can be enforced if the event .

1. Does not happen within fixed time
2. Becomes impossible before the expiry of fixed time
3. Happens within the fixed time
4. Both (1) and (2)

Q.22 Where the contingency of event merely indicates the mode or manner of performance, the
contract is not .

1. Valid
2. Void
3. Contingent
4. Lawful

Q.23 X owes Rs. 10,000 to Y under a contract it is agreed between X, Y & Z that Y shall
henceforth accept Z as his Debtor instead of X for the same amount. Old debt of
X is discharged, and a new debt from Z to Y is contracted. This is :

1. Alteration of contract
2. Rescission of contract
3. Novation of contract
4. All of the above

Q.24 When a 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 -

1. enter into a contract
2. make a proposal
3. accept an offer
4. create legal obligation.

Q.25 An Agreement made on account of natural love and affection, but without consideration is
valid if it is

1. expressed in writing
2. registered under law for the time being in force for registration of documents
3. made between parties standing in a near relation to each other
4. all of the above.

Q. 26 Mere silence as to facts, likely to affect the willingness of a person to enter into a contract
is not Fraud.

1. True
2. Partly True
3. False
4. None of the above.

Q.27 An agreement which restricts a person's freedom to marry or to marry any person of his
choice is against public policy and is -

1. Lawful
2. Illegal
3. Void
4. Enforceable

Q.28 A contracts to act at a theatre for six months for Rs.5 Lakhs paid in advance by B. On
several occasions A is too ill to act. The contract to act becomes void on those occasions due to -

1. initial impossibility
2. subsequent illegality
3. subsequent impossibility
4. destruction of subject matter

Q.29 Assignment by operation of law takes place -

1. by the mutual consent of the parties
2. by the will of either party
3. when the subject matter of a contract ceases to exist
4. by the death of a party to a contract

Q.30 In which of the ways can a contract be discharged by operation of law?

1. Death of Promisor
2. Insolvency of Promisor
3. Merger of Rights
4. All of the above

Q.31 In cases of refusal to perform by any one party, the other party can -

1. ignore the notice of refusal for the time being and wait till the time when the contract is to be
2. waive his right to rescission by acquiescence
3. treat the repudiation as wrongful putting an end to the contract
4. all the above.

Q.32 Death of Offeree before acceptance terminates the offer.

1. True
2. Partly True
3. False
4. None of the above.

Q.33 An agreement to agree in future is -

1. Valid
2. Voidable
3. Illegal
4. Invalid

Q.34 Bilateral Mistake as to fact renders an agreement void since -

1. There is no consideration
2. Such agreements are unlawful.
3. There is no agreement as there is absence of consensus.
4. It is opposed to public policy.

Q.35 An agreement entered into with free consent & lawful but inadequate consideration is :

1. Void
2. Voidable
3. Illegal
4. Valid

Q.36 As a general rule minor's agreements are :

1. Void ab initio
2. Voidable
3. Valid
4. Unlawful

Q.37 A minor's estate is liable for the supplied to him :

1. Luxuries
2. Necessities
3. Necessaries
4. All the things

Q.38 In a contract both the parties believe that the subject matter of the contract is in existence
but which is infact not in existence. Agreement shall be :

1. Valid
2. Void
3. Void due to bilateral mistake
4. Void due to unilateral mistake

Q.39 A contract with resident of an enemy country is :

1. Illegal
2. Void
3. Valid
4. Voidable

Q.40 A servant is employed for one year on a monthly salary of Rs. 1800, the whole salary to be
paid at the end of the year. The servant wrongfully leaves the service after six months. Is the
entitled to any salary?

1. He is entitled to the whole salary
2. He is entitled to the salary of six months.
3. He is entitled to the salary which his master thinks suitable
4. He is not entitled to any salary.

Q.41 Suppose the time fixed for performance of the contract has expired but the time is not
essential. What is the remedy of the promisee in this case :

1. Can rescind the contract
2. To claim compensation
3. No remedy available
4. Can't be determined

Q.42 If time is the essence of a contract and the promisor fails to perform the contract by the
specified time, the contract :

1. Remains Valid
2. Becomes Void
3. Becomes Unenforceable
4. Becomes Voidable at the instance of the promise

Q.43 A contract can be discharged by :

1. Mutual agreement and performance
2. Lapse of time and operation of law
3. Breach of contract
4. All of these

Q.44 damages are measured on the basis of extent of shock to the sentiments of promisee

1. Vindictive
2. Nominal
3. Loss of reputation
4. Discomfort

Q.45 E contracts to marry F. Before the agreed date of marriage, E marries K. Here, F is entitled
to sue E for :

1. Anticipatory Breach in an express manner
2. Actual Breach in an express manner
3. Anticipatory Breach in an implied manner
4. Actual Breach in an implied manner

Q.46 The basis of 'quasi contractual' relations is the :

1. Existence of a valid contract between the parties
2. Prevention of unjust enrichment at the expense of others
3. Existence of a voidable contract between the parties
4. Provisions contained in section 10 of the Indian Contract Act

Q.47 A person enjoying the benefits of a lawful non - gratuitous act of another :

1. Is liable to compensate that another
2. Has to perform the same non - gratuitous act in return
3. Is not liable to compensate that another
4. That another cannot claim any compensation

Q.48 The Contract of General Insurance is :

1. Contingent
2. Valid
3. Voidable
4. None of these

Q.49 In which case the promisor must apply for the performance:

1.where no time for performance is specified and the promise is to be performed without
demand by the promisee.
2.where no place for performance is specified and the promise is to be performed without
demand by the promisee.
3.where time for performance is specified and the promise is to be performed without demand by
the promisee
4. None of these.

Q.50 Which of the following contract is invalid?

1. A verbal promise made without consideration to compensate the person who has already done
something voluntarily or has done something which the promisor was legally bound to do.
2. A written promise to pay time barred debt
3. Completed gifts between parties who do not stand in a near relation to each other
4. A promise to pay Rs.1000 p.m. to wife for her maintenance by a Hindu Husband by a
registered document after referring to quarrels.

Important MCQs on Sale of goods Act, 1930

Q.1 The property in goods in a contract for sale of specific or ascertained goods, passes to the
Buyer when the

1. Contract is made
2. Parties intend the property in goods to pass
3. Price is paid
4. All of the above.

Q.2 When the terms of a contract of sale of goods are such that by reserving the right of disposal,
the Seller commits breach of the contract, and the goods are appropriated to the contract does not
cause the property in goods to pass to the Buyer. It is

1. Partly True
2. True
3. Partly False
4. False

Q.3 Where the buyer wrongfully refuses to accept delivery of the goods, the seller may recover
the damages

1. for the reasonable charges for the care and custody of the goods
2. for the loss caused by non-acceptance of the goods
3. either (a) or (b).
4. for both (a) and (b)

Q.4 According to Sale of Goods Act, 1930, 'Seller' means a person

1. Who only agrees to sell goods
2. Who only sells goods
3. Who sells or agrees to sell goods
4. None of the above

Q.5 Under the Sale of Goods Act, 1930 existing goods are classified as

1. Specified Goods
2. Ascertained Goods
3. Unascertained Goods
4. All of the above

Q.6 In case of sale of goods

1. General property in the goods must be transferred to the buyer
2. Possession of goods must be transferred to the buyer
3. Special property in the goods must be transferred to the buyer
4. Both (1) and (2)

Q.7 "Contract of Sale' under Section 4 of the Sale of Goods Act, 1930 comprises of contracts
which are

1. Executory
2. Concluded
3. Both executory and executed
4. Executed

Q.8 Following is not the document of title

1. railway receipt
2. bill of lading
3. dock warrant
4. none of the above

Q.9 When seller exercises right of lien or right of stoppage of goods in transit and gives notice to
buyer for payment and buyer done not pay or tender within reasonable
time an Un paid seller can

1. re-sale the goods
2. cannot resale the goods
3. ask again to buyer
4. take possession and mark good as bad

Q.10 In a contract of sale of goods, the implied condition as to wholesomeness applies to

1. medicines
2. eatables
3. cloths
4. computers

Q.11 X agrees to supply to Y a certain quantity of timber of half-inch thickness. The timber
actually supplied varies in thickness from one third inch to five-eight inch. The timber is
merchantable and commercially fit for the purpose for which it was ordered. B rejects the timber.
Is his action justified ?

1. Yes, Y is entitled to reject the goods
2. No, Y is not entitled to reject the goods
3. Y can claim the damages if purpose is not solved after using the timber
4. X can ask for the difference amount

Q.12 Implied condition as to quality or fitness does not apply if

1. Buyer discloses to the seller, the exact purpose for which goods are to be bought
2. Buyer indicates to the Seller that the relies on the seller's skill
3. Seller deals in such goods
4. Buyer reserves the right to examine the goods and check its quality

Q.13 When goods are sent on 'sale or return basis' i.e., on approval to a buyer, the property in the
goods passes

1. When the buyer signifies his approval
2. When the buyer pledges the goods without signifying approval
3. When the buyer retains the goods after the expiry of time fixed or reasonable time to return the
4. When any of the above stated situations emerges

Q 14 The consideration in a contract of sale is called

1. Price
2. Exchange money
3. Barter money
4. Reward

Q.15 Under Sec.19 of the Sale of Goods Act, 1930, the property in goods passes to the buyer

1. When the contract is made
2. When the payment of price is made
3. on delivery of goods
4. When the parties intend the property in goods to pass

Q.16 According to Sec. 15 of the Sale of Goods Act 1930, the implied condition is that the goods
shall correspond with

1. Description
2. The sample
3. Either sample or description.
4. Both sample and description

Q.17 as per Sale of Goods Act, a condition is a stipulation

1. Breach of which gives rise to a right to repudiate the contract
2. Which is collateral to the main purpose of the contract?
3. Which is essential for the main purpose of contract?
4. Both (1) and (3)

Q. 18 .............................conditions and warranties are those which have expressly agreed upon
by the parties at the time of the contract of sale and are expressly provided in the contract.

1. Express
2. Implied
3. Payment
4. Terms

Q.19 when a breach of a condition is treated as a breach of a warranty, the buyer can-

1. Repudiate the contract
2. Reject the goods
3. Claim damages
4. None of the above

Q.20 Delivery of goods to is deemed to be the delivery of goods if the seller does
not reserve the right of disposal of the goods.

1. Carrier
2. Third party
3. Carrier or wharfinger
4. wharfinger

Q21.When an unpaid seller, who has exercised his right of lien or stoppage in transit, resells the
goods, the buyer

1. The buyer does not acquires a good title to the goods as against the original buyer
2. The seller does not have a right to sell
3. The buyer acquires a good title to the goods as against the original buyer
4. None of the above

Q. 22 When property in goods has not passed to the buyer, the unpaid seller has a right of

1. Withholding delivery
2. Stoppage in transit
3. (1) and (2)
4. (1) or (2)

Q.23 the intention of the parties to transfer the property in goods from the seller to the buyer can
be inferred from the

1. Terms of the contract
2. Conduct of the parties
3. Circumstances of the case
4. All the above

Q.24 The Seller of Goods is deemed to be an Unpaid Seller when the........ Of the price has not
been paid or tendered.

1. Whole
2. Part
3. Substantial portion
4. Minimal portion

Q.25 In the case of ..........., the sale may be notified to be subject to a reserve or upset price.

1. Sale by description
2. Sale by auction
3. Sale by sample
4. Sale by estoppel



It is a contract by which one party promises to save the other from loss caused
to him by the conduct of the promisor himself or by the conduct of any other
person. It is made in order to protect the promisee against anticipated loss.

There are only two parties involved i.e. the person who promises to make good
the loss generally known as the indemnifier (promisor) and the person whose
loss is to be made good called as the indemnified (promisee).

There is only one contract between the parties.

There is an undertaking on the part of the indemnifier to be answerable for the
debt or default of another.

The liability of the indemnifier to the indemnified is primary and independent.

This contract is for the reimbursement (compensation) of loss.


It is a contract to perform the promise or discharge the liability of a third person
in case of his default. It is made to enable a person to get a loan or goods on
credit or an employment.
There are three parties involved i.e. the person who gives the guarantee known
as the surety, the person in respect of whose default the guarantee is given
known as the principal debtor and the person to whom the guarantee is given
known as the creditor.
There are three contracts first b/w creditor & principal debtor, second b/w
surety & creditor, third b/w surety & principal debtor.
The primary liability is of principal debtor and the surety has a secondary
liability. Which means that the payment is to be made by the surety only if the
debtor does not pay.
This contract is for the security of the creditor.


Right of subrogation (interchange): when the surety has paid the
guaranteed debt on default of the principal debtor he is then entitled to all
the rights which the creditor had against the principal debtor. The surety is
entitled to all the remedies which are available to the creditor against the
principal debtor
Right to securities: Surety is entitled to the benefit of all the securities given
by the principal debtor to the creditor. The surety at the time of payment
can demand the securities, which the creditor has received from the
principal debtor. Surety can recover the securities only after making full
payment. He cannot claim the benefit of a part of the securities if he has
paid a part of the debt.
Right of surety when the creditor loses or parts with the securities of the
principal debtor: if the creditor by negligence loses any security held by him,
or if the creditor parts with the security, the liability of the surety is reduced
to the extent of the value of those securities.
Right of reimbursement (compensation) from the principal debtor: a surety
is entitled to recover from the principal debtor whatever amount, he has
rightfully paid to the creditor.

The liabilities of the surety are co-existent which those of the principal
debtor unless it is otherwise provided.
Example: if A guarantees to B the payment of a Bill of Exchange by C, the
acceptor. The bill is dishonored by C. A is liable not only for the amount of
the bill but also for any interest or charges which may have become due on

Change in the terms of the contract: If the principal debtor and the creditor
make any changes, without the consent of the surety, the surety is discharged
from the contract.

Discharge by death of the surety: In specific guarantee the surety is not
discharged from his liability on his death if the liability has already occurred. But
the death of surety operates as revocation of a continuing guarantee as to
future transactions. The deceased suretys estate will not be liable for any
transaction after the death, even if the creditor has no knowledge of suretys

Release or discharge of principal debtor: a surety is discharged by any contract
between the creditor and the principal debtor, or any act or omission of the
creditor by which the principal debtor is released or discharged.
Compounding of creditor with principal debtor: a contract between the
creditor and the principal debtor, by which the creditor makes a composition
with, or promises to give time to, or not to sue, the principal debtor, discharge
the surety.

Definition: SEC. 124-
A contract by which one party promises to save the other from loss caused to him by
the conduct of the promisor himself, or by the conduct of any other person, is called a
Contract of Indemnity.
E. g. A car insurance policy

TWO parties- Indemnity holder
Sec. 10- essentials should be satisfied
All insurance contracts are contracts of indemnity except life insurance.

Rights of Indemnity Holder:
o To claim damages
o To claim costs
o Other payments

Definition: SEC. 126-
A Contract of Guarantee is a contract to perform the promise, or discharge the
liability, of a third person in case of his default.
E.g. Guarantee for credit sales by a third person
Parties to guarantee
Surety- Who gives Guarantee
Principal Debtor- For whom guarantee is given
Creditor- To whom guarantee is given

Valid Contract ( essentials of Sec-10)

Consideration for surety is loan given by creditor.
Liability arises immediately when debtor makes default.
Implied Indemnity
Right Of Subrogation
Disclosure of Facts
Form- Oral or Written
Existence of Principal Debt.

Difference b/w Indemnity & Guarantee
Basis Indemnity Guarantee
Meaning A contract by which one
party promises to save the
other from loss caused to
him by the conduct of the
promisor himself, or by the
conduct of any other
person, is called a Contract
of Indemnity.
A Contract of Guarantee is
a contract to perform the
promise, or discharge the
liability, of a third person in
case of his default.
Section 124 126
No. of Parties 2 3
No. of Contracts 1 3
Nature of Liability Primary Secondary
Object Compensation of loss Relief to Debtor
Existence of
Not necessary Necessary
Interest No real interest Real interest for surety
Consideration Consideration is present No consideration for surety or
SUFFICIENT consideration for
surety in the form of loan
given to the debtor.



Revocation of Continuing Guarantee
By notice
By Death of Surety
By other modes :
Alteration without consent
Discharge of Debtor

Nature & Extent of suretys liability
Secondary in nature
Immediate in nature
Co- extensive
Surety may limit his liability
Liability in continuing guarantee
In case of void agreement, surety will still be liable. E.g. surety for agreement by
a minor.

Right against the principal debtor

Right against the Creditor
Right to Claim Securities
Right of set off
Right to share reduction
Right to demand termination of employee (fedelity insurance)

Right of contribution against Co- Sureties
Guarantee for equal amount:
Equal Contribution
Guarantee for different amounts:
Burden of default to be shared equally up to respective amount of guarantee.

By Revocation
By notice
By death of surety
By novation

By conduct of creditor
By variation in the terms
Release or discharge of debtor
Compounding with principal debtor
Impairing Suretys remedy
By loss of security

By Invalidation of Contract of Guarantee
Guarantee obtained by misrepresentation
By concealment
Failure of Consideration Failure of Co-Surety to join

Contract Of Agency
According to Sec 182 defines an Agent as a person employed to do any act for
another or to represent another in dealings with third person. The person for whom
such act is done or who is represented is called the principal. The relationship
between the agent and the principal is called agency.

Principal Of Agency
Contracts of agency are based on two important principles, namely:
Whatever a person can do personally shall also be allowed to be done through
an agent except in case of contracts involving personal services such as painting,
marriage, singing, etc.
He who does not act through a duly authorized agent does it by himself, i.e.,
the act of the agent are considered the acts of the principal (Sec. 226)

Who Can Be An Agent
Any person who is of the age of majority according to the law to which he is
subject and who is of sound mind, may an agent.
The function of an agent is to bring his principal into connectional relations with
third parties. The agent is merely a connecting link between the principal and
third parties .

Difference Between An Agent And A Servant
Scope of authority: An agent can create a contractual relationship between
the principal and third parties. But a servant cannot create contractual
relationship between its employer and third parties.
Remuneration:An agent receives commission for his services. A servant is
generally paid wages or salary.
On whose behalf: An agent may work for several principals at the same time. A
servant can serve only one master at a time
Control: An agent is not subject to direct control and supervision of the
principal. He is often discretion. But a servant acts under the direct control and
supervision of his master and must follow all his reasonable order.
Liability of principal: The principal is liable for all the wrongful acts of his agent
which are within the scope of his authority. But the master is bound by the
wrongful acts of his servant if done in the course of servants employment.

Creation of Agency

Agency Classification
1) Express Agency (sec186) A person may be appointed agent, either by word of
mouth or by writing. No particular form is required for appointing an agent.
2) Implied Agency (sec187) - An agency which arises from the conduct, situation
or relationships of parties.
Agency by Estoppel (sec237) When a person has by his conduct or statements
induced others to believe that a certain person is his agent, he is estopped from
subsequently denying it.
Ex - A tells B that he is Cs agent, this he does in the presence of C and within
his hearing. C does not object to the statement of A is actually not his agent.
Later B makes a deal with A as agent of C. C shall be bound by this deal.

Agency by holding out (sec189) Though part of the law of estoppel, some
affirmative conduct by the principal is necessary in creation of agency by
holding out.
Ex - A child purchase goods from a shop and desires the shopkeeper to collect
payment from his parents later. The parents, though not bound to pay, make
the payment. After a few days, the child again makes purchases from the shop
on the credit of the parents. The parents would be bound this time because, by
making payment earlier without raising any objection, they had held their child
out as their agent for making such purchases.

Agency of necessity (sec189) - This arises where there is no express or implied
appointment of a person as agent for another but he is forced to act on behalf
of a particular person.
Ex - A horse was sent by rail at the destination it was not taken delivery by the
owner. The station master had to feed the horse. Held, station master became
the agent by necessity and hence the owner must compensate him.
3) Agency by ratification (sec197) Where an agent does an act for his principal
but without knowledge or authority or where he exceeds the given
authority, the principal is not held bound by the transaction.
Ex - L made an offer to X, MD of a company. X accepted the offer though he
had no authority to do so. L subsequently withdrew the offer, but the company
ratified Xs acceptance.
Held L was bound. The ratification related back to the time X accepted the offer,
thus rendering the revocation of the offer inoperative. An offer once accepted
cannot be withdrawn.

Classification Of Agents

1) Mercantile Or Commercial Agents
i. Broker: A broker is a mercantile agent engaged to buy and /or sell property or
to make bargains and contract between the engager and a third party for
ii. Factor: A factor is a mercantile agent who is entrusted with the possession of
goods with an authority to sell the same.
iii. Commission Agent: A commission agent is an agent who is employed to buy or
sell goods or transact business.
iv. Del Credere Agent: A del credere agent is one who, in consideration of an extra
remuneration, called a del credere commission, guarantees the performance of
the contract by the other party.
v. Auctioneer: An auctioneer is an agent appointed to sell goods by auction.
vi. Banker: though the relationship between banker and customer is ordinarily that
of debtor or creditor, he acts as an agent when he buys or sells securities on his
vii. Pakka and Katcha Adatias: A pakka Adatia is a person who guarantees the
performance of the contract, not only to his principal but also to the broker to
the other side.
A katcha adatia does not guarantee the performance of the contract.

viii. Indentor: An intentor is commission agent, who,, for a commission, procures a
sale or a purchase on behalf of his principal, with a merchant in a foreign
2) Non-Mercantile or Non Commercial Agents
i. Wife As The Agent
ii. Sub-Agents
1) General
2) Special

Rights of an Agent
Right to remuneration(Sec 219-220) :- An agent is entitled to his agreed
commission or remuneration and if there is no agreement, to a reasonable
remuneration.[Sheikh Farid Baksh v. Hasgulal Singh A.I.R (1937) ALL 46]
However, an agent who is guilty of misconduct in the business of agency is not
entitled to any remuneration in respect of that part of the business which he has
misconducted. (Sec 220)
Right of Retainer(Sec 217) :- This is also known as agents right of retainer. It
can only be claimed on money received by him in the business of the agency.
He can not therefore, retain, sums received by him in one business for his
commission or remuneration in other business on behalf of the same principle.

Rights of Lien(Sec 221) :- In the absence of any contract to the contrary,
an agent is entitled to retain goods, papers, and other property, whether
movable or immovable of the principal received by him until the amount
due to himself for commission, disbursement, and services in respect of the
same has been paid or accounted for to him.
Right of stoppage-in-transit :- This right is available to agent in the following
two cases:-
Where he has purchased goods with his own funds or by incurring personal
liability. Like an unpaid seller, he enjoys the right of stopping the goods in
transit if in the meantime the principle has become insolvent.
Where he holds himself liable for the price of goods sold for example, del
credere agent, he may exercise the unpaid sellers right of stopping the goods in
transit in case at buyer's insolvency.
Right of Indemnification(Sec 222-224) :- The principal is bound to indemnify an
agent against the consequences of all lawful acts done by the agent in exercise
of authority conferred upon him. (Sec 222)

Example :- B, at Singapore, under instruction from A of Calcutta,
contracts with C to deliver certain goods to him. A does not send the goods to
B, and C sues B for breach of contract. B informs A of the suit, and A authorizes
him to defend the suit. B defends the suit, and is compelled to pay damages and
costs, and incurs expenses. A is liable to B for such damages, costs and
According to Sec 224 an agent can not claim indemnification for a
criminal act, even though the principal had agreed to do so.
Example :- A employs B to beat C, and agrees to indemnify him
against all consequences of that act. B thereupon beats C and has pay damages to C
for so doing. A is not liable to indemnify B for those damages.
Right to Compensation for injury caused by principals neglect (Sec 225) :- The
principal must make compensation to his agent in respect of injury caused to
such agent by the principals neglect or want of skill.
Example :- A employs B as a bricklayer in building a house, and puts
up the scaffolding himself. The scaffolding is unskillfully put up, and B is in
consequence hurt. A must make compensation to B.

Duties of Agent

1) To Conduct the business of agency according to the principals directions
(Section 211)
Lilley v. Doubleday (1881)
2) The Agent should conduct the business with the skill and diligence that is
generally possessed by persons engaged in similar business, except where the
principal knows that Agent in wanting the skill (Section 212)
e.g. Where a lawyer proceeds under a wrong section and thereby the case is lost,
he shall be liable for the loss.
3) To render proper accounts (Section 213)
Rendering account does not mean showing the account supported by the
vouchers (Anand prashad v. Dwarkanath)
4) In cases of difficulty to communicate with the principal (Section 214)
5) Not to make any secret profits
6) Not to deal on his own account
7) Agent not entitled to remuneration for business misconducted
e.g. A employs B to recover Rs.10,000 from C. Through misconduct the money is
not recovered. B is entitled to no remuneration for his services, and must make good
the loss.