Detailed comparison between Sale and Bailment:

Sale

Bailment

Possession

Possession of goods is
transferred to the buyer.

Possession of goods is
transferred to the bailee.

Ownership

Ownership is transferred
to the buyer.

Ownership resides with

the bailor.

Usage

The buyer may use the

goods in any way he
likes.

A bailee can use the

goods only according to
the directions of the
bailor.

Return

There is no return of
goods from the buyer to
the seller, unless there is
breach.

The goods are returned

after the specified time or
accomplishment of the
purpose.

Consideration

The consideration is the

price in terms of money.

The consideration is an
undertaking to return the
goods after the
accomplishment of the
purpose.

Charges

The question of any

charges to be paid by the
seller to buyer or vise
versa does not arise.

The bailor has to repay

the charges which the
bailee has incurred in
keeping the goods safe.

Duration

Final. Once the sale is

transacted, the seller
keeps the goods until he
decides to sell them to
another.

Temporary. The bailee has

to return the goods to the
bailor once the specified
time is passed.

Comparison Chart: BAILMENT VS. PLEDGE

Example: Clothes given in laundry for cleaning are an example of bailment.

Example: Money taken as debt from the money lender by pledging gold as security against it is
an example of Pledge.

BASIS FOR
COMPARISON

BAILMENT

PLEDGE

Meaning

When the goods are

temporarily handed over from
one person to another person
for a specific purpose, it is
known as bailment.

When the goods are

delivered to act as security
against the debt owed by one
person to another person, it
is known as the pledge.

Defined in

Section 148 of the Indian

Contract Act, 1872.

Section 172 of the Indian

Contract Act, 1872.

Parties

The person who delivers the

goods is known as the Bailor
while the person to whom the
goods are delivered is known
as Bailee.

The person who delivers the

goods is known as Pawnor
while the person to whom
the goods are delivered is
known as Pawnee.

Consideration

May or may not be present.

Always present.

Right to sell the

goods

The party whom goods are

The party whom goods are
being delivered has no right to being delivered as security
sell the goods.
has the right to sell the goods
if the party who delivers the
goods fails to pay the debt.

Use of Goods

The party whom goods are

being delivered can use the
goods only, for the specified

The party whom goods are

being delivered has no right

BASIS FOR
COMPARISON

Purpose

BAILMENT

PLEDGE

purpose.

to use the goods.

Safe keeping or repairs, etc.

As security against payment

of debt.

Key Differences Between Bailment and Pledge

The following are the major differences between Bailment and Pledge
1. A Bailment is a contract in which goods are transferred from one party to another party for
a short period of time for a specific objective. The Pledge is a kind of Bailment in which
goods are pledged as security against payment of debt.
2. A Bailment is defined under section 148 while Pledge is defined under section 172 of the
Indian Contract Act, 1872.
3. In bailment, the consideration may or may not be present, but in case of pledge, the
consideration is always present.
4. The objective of bailment is safe custody or repairing of goods delivered. On the other
hand, the sole purpose of delivering the goods is to act as security against debt.
5. The receiver has no right to sell the goods in case of bailment whereas if the goods are not
redeemed by pawnor within the reasonable time the pawnee can sell the goods after giving
a notice to him.
6. In bailment, the goods are used by the bailee only for the said purpose. Conversely, in
pledge, pawnee has no right to use the goods.
Fraud Vs Misrepresentation
Definition of Fraud

A false representation willfully made by a party to contract in order to mislead the other party
and inducing him to enter into contract is known as fraud.
1. Fraud is defined under Sec. 17.
2. Fraud means a misrepresentation made with an intention to cheat
3. The distinction between fraud and misrepresentation is solely on intention.
4. In case of fraud, the aggrieved party can avoid the contract even if the means to discover the
truth were available.
5. In case of fraud not only the agreement is voidable but also the aggrieved party can claim
damhges
Example: A purchased goods of Rs. 5000 from a shopkeeper B, with the intent of not paying the
money to B, this type of act amounts to Fraud.
Definition of Misrepresentation
A representation of a material fact made by a party to contract who believes it to be true, the
other party relied on the statement, entered into the contract and acted upon it which later on
turned out to be incorrect is known as misrepresentation. The representation is made
unintentionally and unknowingly, not to deceive the other party but it became a reason of loss to
the other party.
Now, the contract is voidable at the option of the injured party who has the right to avoid his
performance. Although, if the truth of material fact can be discovered by the aggrieved party in
the normal course, then the contract is not voidable.
1. Misrepresentation is defined under Sec. 19
2. Misrepresentation means a misstatement made innocently.
3. In case of misrepresntation misstatement is made innocently.
4. In case of misrepresentation if the aggrieved party has the means to discover the truth, it
cannot avoid the contract.
5. In case of misrepresentation no damages can be claimed, the aggrieved party can only avoid
the contract.

Example: A says to B to purchase his car which is in a good condition, B purchased it in good
faith but after a few days, the car did not function properly and B has to suffer loss to repair the
car. So the act amounts to misrepresentation as A believes that the car works properly but this is
not so.

Comparison Chart
BASIS FOR
COMPARISON

FRAUD

MISREPRESENTATION

Meaning

A deceptive act done

intentionally by one
party in order to
influence the other
party to enter into the
contract is known as
Fraud.

The representation of a
misstatement, made innocently,
which persuades other party to enter
into the contract, is known as
misrepresentation.

Defined in

Section 2 (17) of the

Indian Contract Act,
1872

Section 2 (18) of the Indian Contract

Act, 1872

Purpose to
deceive the other
party

Yes

No

Variation in extent In a fraud, the party

of truth
making the
representation knows
that the statement is
not true.

In misrepresentation, the party

making the representation believes
the statement made by him is true,
which subsequently turned out as
false.

BASIS FOR
COMPARISON

FRAUD

MISREPRESENTATION

Claim

The aggrieved party,

has the right to claim
for damages.

The aggrieved party has no right to

sue the other party for damages.

Voidable

The contract is
The contract is not voidable if the
voidable even if the
truth can be discovered in normal
truth can be discovered diligence.
in normal diligence.

Coercion Vs Undue Influence

Definition of Coercion
Coercion is a practice of unlawfully intimidating a person or property, employed to induce a
person to enter into an agreement without his independent will. This involves physical pressure.
It is an act of compelling a person in such a manner, that he doesnt have any choice rather than
entering into an agreement with the other party.
Example: A threatens B to marry him, or else he will kill her whole family. In this situation, the
consent of B is not free i.e. it is influenced by coercion.
Definition of Undue Influence
Undue Influence is a situation in which one person, influences the free will of another person by
using his position and authority over the other person, which forces the other person to enter into
an agreement. Mental pressure and moral force are involved in it.
Example: A teacher forces his student to sell his brand new watch, in a very nominal price, in
order to get good grades in the examination. In this situation, the consent of the student is
affected by the undue influence.
Comparison Chart

BASIS FOR
COMPARISON

COERCION

UNDUE INFLUENCE

Meaning

Coercion is an act of
threatening which
involves the use of
physical force.

Undue Influence is an act of

influencing the will of the other
party.

Sections

It is governed by Section It is governed by Section 16 of

15 of the Indian Contract the Indian Contract Act, 1872.
Act, 1872.

Use of

Psychological pressure
or Physical force

Mental pressure or Moral force

Purpose

To compel a person in
such a way that he enters
into a contract with the
other party.

To take unfair advantage of his

position.

Criminal Nature

Yes

No

Relationship

The relationship between The act of undue influence is

parties is not necessary.
done only when the parties to the
contract are in relationship. Like
teacher - student, doctor - patient
etc.

What are the differences between Rights in Rem and Rights in Personam?
Differences between Rights in Rem and Rights in Personam are as follows:

Rights in Rem
1.

A right in rem is available against the world at large. (Rem = world).

2.

Example: I have a house. The people of the world have a duty not to interfere with my
possession. Nobody has right to disturb my possession and enjoyment.

3.

I have money in my pocket. I can use my money as like. The world at large has no right to
interfere with my possession.

4.

It is called real right. Converse this right; there is a duty upon every person of the world
not to interfere with others rights.

5.

This right protects interest against the world at large.

6.

Patent right, copy right, etc. are the best examples for the rights in rem.

7.

All rights in rem are negative.

8.

It is available against an open or indefinite class of persons.

9.

The freedoms given in article 19 of the Indian constitution with its restrictions are the
rights in rem.

10.

All general offers are rights in rem.

Rights in Personam
1.

A right in personam is available only against a particular person.

2.

Example: I let my house to Z-tenant. I have a right to receive rent from my tenant. This
right to receive rent from my tenant. This right to receive rent is a right in personam. The rest of
the world is not concerned with this right.

3.

y-debtor has to give me Rs. 5,000/-, who had taken from me as a hand-loan. I have the
right in personam to receive back the sum of Rs. 5,000/- from X.

4.

It is also called as personal right. Converse this right, there is a duty imposed upon
determinate individuals.

5.

This right protects an interest solely against determinate individuals.

6.

Purchase of good-will of business is the best example for the right in personam.

7.

All rights in personam are positive.

8.

It is available only against a specific person or persons.

9.

All easements are the rights in personam.

10.

All specific offers are rights in personam.

Difference between Partnership and a Company
Definition of Partnership Firm

The kind of business organization in which, two or more persons agree to carry on the
business, on behalf of the firm or partners and to share profits & losses mutually. There are
three major points in this definition, they are:
Agreement There must be an agreement between partners, irrespective of oral or
written.
Profit The profit & loss of the business must be distributed among the partners, in the
specified ratio.
Mutual Agency Each partner is an agent of the firm as well as of the other partners
who carry on the business.
Definition of Company

A company is an association of persons, formed and registered under the Indian Companies
Act, 1956 or any other previous act. The following are the major features of a company:
It is an artificial person.
It has a separate legal entity.
It has limited liability.
It has perpetual succession.
It has a common seal.
It can possess property in its own name.

Some of the major distinction between partnership and a company are as follows:

1. Regulating Act:
A company is regulated by Companies Act, 1956, while a partnership firm is governed by the
Indian Partnership Act, 1932.
2. Registration:
A company cannot come into existence unless it is registered, whereas for a partnership firm
registration is not compulsory.
3. Number:
The minimum number in a public company is seven and in case of a private companies two. In
case of partnership the minimum number of partners is two. The maximum limit of members in
case of a private company is fifty but in case of public company there is no maximum limit. In
partnership the number should not exceed twenty, while in case of banking business, it should
not exceed ten.
4. Liability:
In case of joint stock company the liability of shareholders is limited (except in case of unlimited
companies) to the extent of face value of shares or to the extent of guarantee, whereas, in case of
partnership the liability of partners is unlimited.
5. Management:
The affairs of a company are managed by its directors. Its members have no right to take part in
the day to day management. On the other hand every partner of a firm has a right to participate in
the management of the business unless the partnership deed provides otherwise.
6. Capital:

The share capital of a company can be increased or decreased only in accordance with the
provisions of the Companies Act, whereas partners can alter the amount of their capital by
mutual agreement.
7. Legal Status:
A company has a separate legal status distinct from its shareholders, while a partnership firm has
no legal existence distinct from its partners.
8. Transfer of Interest:
Shares in a public company are freely transferable from one person to another person. In private
company the right to transfer shares is restricted, while a partner cannot transfer his interest to
others without the consent of other partners.
9. Insolvency/Death:
Insolvency or death of a shareholder does not affect the existence of a company. On the other
hand a partnership ceases to exist if any partner retires, dies or is declared insolvent.
10. Winding up:
A company comes to an end only when it is wound up according to the provisions of the
Companies Act. A firm is dissolved by an agreement or by the order of court. It is also
automatically dissolved on the insolvency of a partner.
11. Books:
The provisions of Companies Act, 1956 have their bearing on the preparation of accounts books
of a company but in case of firm there is no specific legal direction to this effect.
12. Audit:

Audit of accounts of a company is compulsory whereas it is generally, discretionary in case of a

firm.
13. Authority of Members:
A shareholder is not an agent of a company and has no power to bind the company by his acts. A
partner is an agent of a firm. He can enter into contracts with outsiders and incur liabilities so
long as he acts in the ordinary course of firms business.
14. Commencement of Business:
A company has to comply with various legal formalities and has to file various documents with
the Registrar of Companies before the commencement of business while a firm is not required to
fulfill legal formalities.

Differences between negotiation

and assignment
The Negotiable Instruments Act does not prohibit transfer of negotiable instruments otherwise than by
negotiation.
The equitable title to the instrument may also be transferred by assignment by a separate deed in
writing in accordance with the Transfer of Property Act. The various points of distinction between
negotiation and assignment are stated below:
1. Formalities:
Negotiation requires mere delivery of a bearer instrument and endorsement and delivery of an
order instrument to effectuate a transfer. Assignment requires a written document signed by the
transferor irrespective of whether the instrument is a bearer or order one.
2. Notice of transfer:
In the case of assignment a notice of transfer of debt is required to be given by the assignee to the
debtor in order to complete his title. No such notice is required to be given in the case of negotiation.

3. Title:
In the case of negotiation if the transferee takes the negotiable instrument for value and in good faith,
i.e., as holder in due course, he takes it free from all defects in the title of the previous transferors.
But in the case of assignment the assignee takes the instrument subject to the defects in the title of his
assignor, even though he took the assignment for value and in good faith.
4. Consideration:
Consideration is always presumed in the case of transfer by negotiation, whereas there is no such
presumption in the case of transfer by assignment, where the burden of proof of consideration lies
upon the assignee.
From the foregoing differences it will be seen that the rights which the transferee of a negotiable
instrument by negotiation acquires are substantially superior to those of an assignee under
assignment, and it is for this reason that the method of transfer by assignment is very rarely used while
transferring negotiable instruments.
Negotiation

Assignment

Negotiation can be done either by delivery or by

Written document duly signed by the transferor is

delivery and endorsement.

mandatory for an assignment.

The consideration in case of negotiation is

The consideration has to be proved in case of an

presumed.

assignment.

A notice of transfer to the creditor is not

Informing the creditor about the assignment is

mandatory.

mandatory.

The Act governing negotiation of negotiable

The activities concerning an assignment are regulated

instruments is the Negotiable Instruments Act,

by the Transfer of Property Act, 1882

1881

Differences Between Sale and Agreement to Sell

Definition of Sale

A sale is a type of contract in which the seller transfers the ownership of goods to the buyer for
money consideration. Here the relationship amidst the seller and buyer is of creditor and
debtor. It is the result of agreement to sell when the conditions are fulfilled and the specified
time is over. The following are the essential conditions regarding Sale:
1. There must be at least two parties, one is buyer and other is the seller.
2. The subject matter of the sale is the goods.
3. Payment should be made in the countrys legal currency.
4. The goods should pass from seller to buyer.
5. All the necessary conditions of a valid contract should be present like free consent,
consideration, a lawful object, capacity of parties, etc.
If the goods are being sold and the property is transferred to the buyer, but the seller is not
paid. Then, the seller can go to the court and file a suit against the buyer for the damages and
the price too. On the other hand, if the goods are not delivered to the buyer then he can also
sue the seller for damages.
Definition of Agreement to Sell

An agreement to sell is also a contract of sale of goods, in which the seller agrees to transfer
goods to the buyer for a price at a later date or after the fulfillment of a condition.
When there is a willingness of the both the parties to constitute a sale i.e. the buyer agrees to
buy and the seller is ready to sale the goods for monetary value. In an agreement to sell the

performance of the contract is done at a future date, i.e. when the time elapses or when the
necessary conditions are satisfied. After the contract is executed, it becomes a valid sale. All the
necessary conditions required at the time of sale, should exist in case of an agreement to sell
too.
If the seller rescinds the contract, then the buyer can claim damages for the breach of contract.
On the other hand, the unpaid seller can also sue the buyer for damages.

Comparison Chart
BASIS FOR

SALE

COMPARISON
Meaning

AGREEMENT TO SELL

When in a contract of

When in a contract of sale the

sale, the exchange of

parties to contract agree to

goods for money

exchange the goods for a price

consideration takes place

at a future specified date is

immediately, it is known

known as an Agreement to

as Sale.

Sell.

Nature

Absolute

Conditional

Type of Contract

Executed Contract

Executory Contract

Transfer of risk

Yes

No

Title

In sale, the title of goods

In an agreement to sell, the

transfers to the buyer

title of goods remains with

with the transfer of

the seller as there is no

goods.

transfer of goods.

Buyer

Seller

Right to sell

BASIS FOR

SALE

COMPARISON
Consequences of

AGREEMENT TO SELL

Responsibility of buyer

Responsibility of seller

VAT is charged at the

No tax is levied.

subsequent loss or
damage to the goods
Tax

time of sale.
Suit for breach of

The buyer can claim

Here the buyer has the right

contract by the seller

damages from the seller

to claim damages only.

and proprietary remedy

from the party to whom
the goods are sold.
Right of unpaid

Right to sue for the price.

Right to sue for damages.

seller
Differences Between Condition and Warranty
Definition of Condition

Certain terms, obligations and provisions are imposed by the buyer and seller while entering
into a contract of sale, which needs to be satisfied, which are commonly known as Conditons.
The conditions are indispensable to the objective of the contract. There are two types of
conditions, in a contract of sale which are:
Expressed Condition: The conditions which are clearly defined and agreed upon by
the parties while entering into the contract.
Implied Condition: The conditions which are not expressly provided, but as per law,
some conditions are supposed to be present at the time making the contract. However,
these conditions can be waived off through express agreement. Some examples of
implied conditions are:

o Condition relating to title of goods.

o Condition with respect to the quality and fitness of the goods.
o Condition as to wholesomeness.
o Sale by sample
o Sale by description.
Definition of Warranty

A warranty is a guarantee given by the seller to the buyer about the quality, fitness and
performance of the product. It is an assurance provided by the manufacturer to the customer
that the said facts about the goods are true and at its best. Many times, if the warranty given,
proves false and the product does not function as described by the seller then remedies like a
return or exchange are also available to the buyer i.e. as stated in the contract.
A warranty can be for lifetime or for a limited period. It may be either expressed, i.e., which is
specifically defined or implied, which is not explicitly provided, but arises according to the
nature of sale like:
Warranty related to undisturbed possession of the buyer.
Warranty that the goods are free from any charge.
Disclosure of harmful nature of goods.
Warranty as to quality and fitness

Comparison Chart
BASIS FOR
COMPARISON
Meaning

CONDITION

WARRANTY

A requirement or event

A warranty is an assurance

that should be performed

given by the seller to the

before the completion of

buyer about the state of the

BASIS FOR
COMPARISON

Defined in

What is it?

Result of breach

CONDITION

WARRANTY

another action, is known

product, that the prescribed

as Condition.

facts are genuine.

Section 12 (2) of Indian

Section 12 (3) of Indian Sale

Sale of Goods Act, 1930.

of Goods Act, 1930.

It is directly associated

It is a subsidiary provision

with the objective of the

related to the object of the

contract.

contract.

Termination of contract.

Claim damages for the

breach.

Violation

Violation of condition can

Violation of warranty does

be regarded as a violation

not affect the condition.

of the warranty.
Remedy available to

Repudiate the contract as

the aggrieved party

well as claim damages.

on breach

Claim damages only.