5 - CONTRACT DISPUTES

CONTRACT DISPUTES - Q1. I run a public carrier company in our business on some occasions the goods given to us are lost. We also execute Agreements with our customers providing that we will not be liable for loss of damage. If our customer files a case against us for loss of goods, what is our liability?

A. A common carrier in India is not merely a bailee as we understand and his liability against the loss or damage is more than what Sections 151, 152 and 161 of the Indian Contract Act 1872 provide. He is an insurer of the goods so to speak and in the absence of a special contract under Section 6 his liability is absolute. By entering into a special contract under Section 6 of the Act, the common carriers' liability may either be governed by the Indian Contract Act 1872 or by the English Common Law.

Q2. I had dispatch certain articles on a passport company which were to be delivered to one of the customers who had paid the amount for the same. The Transport Company lost goods and it never reached our customers. After receiving amount from customer can I as owner sue the Transport Company? Can our customer also file a case and on what basis?

A. The consignor is entitled to sue for the carrier either on the basis of title, if the property in the goods has got passed from him or on the basis of the privity of contract between himself and the carrier for the carriage of goods. If the true owner of the goods has failed to bring an action against the carrier for the loss of or damages to the goods, the consignee is not without remedy. Courts have power to circumnavigate technical hurdles to prevent miscarriage of justice. The consignor, though without title, had privity of contract with the carrier for carriage of goods and so is allowed to sue on it.

Q3. We run a transport company and in our bills it is printed that we shall not be liable for any loss or damage to the articles during transit. If somebody still sue us for such a lost what is our liability?

A. Condition printed on the consignment note to the effect that the carrier company would stand discharged from all liability for any loss or damage, does not result in absolving the carrier company of the liability in absence of special contract signed by owner of goods.

Q4. I sent certain coolers through a transporters who seems to have sold them and did not make delivery as we desired. What is my remedy against such a transporters and what do I have to prove in such a case?

A. If a suit is brought against a common carrier for loss, damage or non-delivery of the goods entrusted to it, it is not for the plaintiff to prove that the loss, damage or non-delivery was due to the negligence of the carrier, his servants or agents. Negligence is presumed from loss of or injury to goods.

Q5. I want to file a case against a party, which signed a contract with me for not following the terms of that contract. The contract was signed in Bombay but I made the offer in Delhi. Can I file the case in Delhi?

A. Suit on breach of contract may be filed at the place where it was made or at the place where it should have been performed and the breach occurred. Mere making an offer does not constitute cause of action in a suit for damages for breach of contract. But when it was accepted, suit may be filed at the place of acceptance.

Q6. Can two parties orally agreed that a particular court will only the able to here any case a filed by one of them?

A. Parties to a contract can orally select a court for the purpose of jurisdiction when more than one courts have concurrent jurisdiction. Such a contract neither is opposed to public policy nor barred by Section 20 of Indian Contract Act.

Q7. I had made an offer to the other party. The other party accepted my offer. However, before the acceptance, which was sent by post, could reached me, I sent a letter to the other party revoking the said offer. The other party challenged my revocation of the offer, saying that the contract was completed. What is the correct legal position?

A. As soon as the acceptance is posted, the acceptance is completed and contract stand concluded in terms of section 4 of the Indian Contact Act.

Q8. The government issued a tender notice. In response, I made an offer to the same. Later, before communication of the offer, I desired to withdraw my offer. The government rejected the same, on the ground that the tender notice contain a clause to the contrary. Am I not entitled to withdraw or modify my offer?

A. You can withdraw or modify your offer before its communication. Merely because the government has put a clause to the contrary in a tender notice, your right to offer cannot be taken away.

Q9. I entered into an agreement with a company. All the proposals made by me were accepted though a formal contract is not yet concluded. Now the other party wants to change certain terms. Can they do so?

A. No the other party cannot change the term of the contract as the proposals made by you had been accepted. As such, the contract is completed even though the formal agreement has not been concluded. Any unilateral change in the agreement without your prior consent, amounts to breach of the terms of contract.

Q10. We have contracted with a foreign company to make computers. After the formal contract was executed we came to know about their previous offer to the other Company. Can the company be now sued for fraud because of concealment of information?

A. You cannot sue the Company as no fraud has been committed by the Company on account of non-disclosure of information relating to previous offer or any past transaction. The Company is not obliged to disclose such information relating to previous offer to any other company.

Q11. I want to enter into an agreement with a Firm whereby that Firm will not bid for a public auction of the govt. Am I legally permissible to do so?

A. Section 27 of the contract Act, provides that any agreement in restrain of trade is void. In view of this provision, you cannot legally enter into an agreement with a Firm whereby that Firm will not bid for a public auction of the Govt.

Q12. I entered into an agreement to buy a Flat. The seller did not give the possession of the Flat after the contract was concluded and earnest money paid. Am I now entitled to the money paid by me to the seller?

A. You are entitle to the refund of money paid by you to the seller on account of his failure to perform his part of the contract. In case the seller fails to refund the said amount, you can file a suit for damages cause by breach of contract by the seller. You can also file a suit for specific performance of the contract, if you want to take the flat.

Q13. My boy friend promised to marry me but he resiled from it. Is it breach of contract?

A. When there was promise to marry but the man resiled from it, it is a breach of promise and this breach is actionable. You are entitled to award of damages.

Q14. I am a Banker working with the Bank I want to know what reasonable care should be taken by a Banker while accepting a Customer. Is there any law relating to the same effect ?

A. As a general rule a banker before accepting a customer, must take reasonable care to satisfy himself that the person in question is of good reputation; and if he fails to do so he will run the risk of forfeiting the protection given by S.131 of the Negotiable Instrument Act but 'reasonable care' will depend on the facts and circumstances of the case. The courts have tended to accept the practices and procedures which bankers lay down for themselves, but that can by no means be decisive.

Q15. I had taken certain loan from my Bank and I defaulted in making payment of a couple of installments. The Bank thereafter to refuse to give me services of their Bank on that ground. Can the Bank stop operation of my current account or interfere in my day to day business transaction ?

A. Subject to Bank's right to sue for arrears the customer concerned the bank is to allow the operation of one current account, which will be free from the incidence of banker's lien so as to enable the party to carry on its normal day to day business transactions, to obtain letters of credit at full margin and to enable payment on several heads.

Q16. I instituted a divorce proceedings against my wife which is pending in the court. We had a locker, which could be operated by both of us. During the continuance of the case my wife withdrew all the contents of the locker. Is her action justified in law and what should I do ?

A. When a joint locker is operatable by both the spouses, removal of contents of locker by one spouse during the pendency of a matrimonial proceeding between the parties is improper.

Q17. My father had pledged certain Gold ornaments with the State Bank against sudden loan taken by him. My father has since died and I approach the Bank for release of the ornaments and offered them to pay the amount. The Bank is however refusing to do the same what should I do ?

A. Gold ornaments pledged with a Bank as security for loan obtained do not fall within the term "security" or "debt" and as such, bank cannot insist on a succession certificate when on the death of pledgor his successor approaches the bank for release of ornaments on payment of all dues.

Q18. What are the duties of a Bank in payment of the amount where a confirmed letter of credit is open with the Bank.

A. The opening of a confirmed letter of credit constitutes a bargain between the banker and the vendor of goods which imposes on the banker an absolute obligation to pay. Duties of a bank under a letter of credit are created by the document itself, but in any case it has the power and is subject to the limitation which are given or imposed by it, in the absence of appropriate provisions in the letter of credit. The banker owes a duty to the buyer to ensure that the documents tendered by the sellers under a credit are complied with.

Q19. I paid to a lawyer by cheque to process my papers for Canadian immigration in 1996. As of today he has not done anything, he does not reply to my registered letters, but tells me that he will repay the amount very soon, when I called him numerous times from my residence in America where I am staying for past two years. What is my remedy?

A. You can file suit for recovery and damages against the said Lawyer at Calcutta only. You can also approach the Consumer Court at Calcutta for the recovery of the amount. The limitation for recovery suit is three years from the date of payment. However, in Consumer Court, limitation is one year from the last correspondence of refusal. That apart, you can also lodge a complaint with the Bar Council of Calcutta against the said lawyer for his conduct and seek cancellation of his license.

Q20. We had got one car financed in the year 1996 for two years 1997-1988 -1999. The cost of vehicle at the time of finance was Rs.10. We paid the Margin money of Rs. 5 to ABC by Bank cheque and got the balance amount of Rs. 5 financed from the said ABC company. The monthly installment we paid was Rs. 1. According to the cheques issued and the statement of records we received from the finance company we came to know they have financed us Rs. 6 and the Margin money they have received is 4. We informed the company the margin money we have paid is Rs. 5 and not 4 but they did not listen to us and kept on sending cheques for clearance in the bank. We have never got any cheque dishonored or even never got any cheque delayed for clearance. We had been sending reminders to the finance company to refund us Rs. 1, which they have financed us in excess. But till today we have not received any reply from the finance co. Now even the case is cleared almost 9 months have passed. We have been demanding for the money and also the clearance certificate but they are not bothered at all and do not intent to send the clearance certificate. Please give us an opinion as to what should we do?

A. You should file a complaint with Consumer Forum for recovery of the amount and amount and damages for breach of contract and harassment. From the facts stated by you, if can be easily proved that the company is trying to cheat you.

Q21. The bank has towed away a vehicle on account of default of 2 installments. The concerned party has offered to pay the defaulted installment but the bankers have refused to return the vehicle and have issued a letter saying that the vehicle has already being sold & are demanding payment of the entire loan amount . Kindly advice the legal options available to the owner of the vehicle hypothecated to the bank?

A. You can file the suit for recovery of car or in the alternative for damages you have suffered. The bank has no right to sell the car without giving notice to you.