PRACTICAL PROBLEMS OF CHAPTER 9

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PRACTICAL PROBLEMS

1)         A, B, C and D enter in a shop. A says to the trader, “supply the goods required by B and if he does not pay, I will”. C says to the trader uLet D have the required goods. 1 will see that you are paidState the nature of the contract between A and B that of between C and D.

Solution: The contract between A and B is a contract of guarantee but between C and D is a contract of indemnity.

 

2)         X, an auctioneer, sold certain goods on the instructions of Y1 Later on, it is discovered that the goods belonged to Z and not to Y. Z recovered damages from X for selling his goods. Can X recover the compensation from Y?

Solution: X is entitled to recover the compensation from Y because there was an implied promise to compensate the auctioneer for any loss, which he may suffer on the defective title for goods sold by auction.

 

3)         X asks Y to beat Z and promises to indemnify Y against the consequences. Y beats Z and is fined Rs. 1,000/=. Can Y claim Rs. 1,000/= from X?

Solution: V cannot claim Rs. 1,000/- from X because the object of the agreement was unlawful.

 

4)         C sells and delivers goods to P. is the agreement of guarantee valid in each of the following alternative cases:

Case (a):  If S afterwards agrees to pay for the goods in default of P.

Case (b): If S afterwards requests C to allow a credit period of 1 year to P and promises that if C does so, he will pay for the goods if P defaults. C agrees to allow as requested. Solution; Section to which the given problem relates: Section 127.

 

Decision and Reason

Case (a):         The agreement of guarantee is void because such agreement was without any consideration.

Case (b): The agreement of guarantee is valid because credit period allowed was a sufficient consideration for S’s promise,

 

5)         C agrees to sell goods to P on the guarantee of S for payment of the price of goods in default of P. is the agreement of guarantee valid in each of the following alternative cases:

Case (a): If C is a minor

Case (b): If S is a minor

Case (c): If P is a minor

Solution:

Case (a): The agreement of guarantee is void because a creditor is incompetent to contract.

Case (b): The agreement of guarantee is void because the surety is incompetent to contract.

Case (c): The agreement of guarantee is valid because the incapability of principal debtor does not affect the validity of agreement of guarantee.

6)         S gives guarantee for the loans given by C to P. P owes Rs. 1,00,000/- to P.P becomes insolvent and a dividend of 20 paisa in a rupee is declared. Discuss the rights of C and S if (a) S gives the guarantee for the payment of the loan of Rs.60,000/= (b) S gives the guarantee for the payment of the loan subject to a limit of Rs.60,000/=.

 

 

Solution:

Right In case of guarantee for a pan of debt [case (a)] In case of guarantee for the entire debt subject to a limit [Case (b)]
Right of C C can recover Rs.60,000/= from S and  Rs.8,000/= (being 20% of the balance of Rs.40,000) from P’s estate C can recover Rs.60,000/= from S and Rs.20,000 (being 20% the entire debt of Rs. 1,00,000/= is paid to C.
Right of S After paying Rs.60,000/= to C, S can  recover Rs. 12,000/= (being 20% of Rs,60,000) from P’s estate. S will not get anything from P’s estate till the entire debt of Rs. 1,00,000/- is paid to C.

 

7)         Sz, Sz and Ss are sureties to C for a sum of Rs. 4,000/= lent to P. P makes default to the extent of Rs. 3,000/=. Discuss the liability of sureties th of the following alternative cases:

Case a): If there is no contract between sureties.

Case b): If there is a contract between sureties that Si to be responsible to t extent of one-quarter, Ss to be responsible to the extent of one quarter :t 83 to be responsible to the extent of two quarter.

Case c): If sureties enter into three separate security bonds of different aunts Si, Rs. 700/-, Sx Rsa 1,100/= and S3 Rs. 1,200/=.

Solution: Section to which the given problem relates: Section 146 and 147.

Decision and Reason

Case (a):         Sz and S3 are liable to pay Rs.l,000/= each because in the absence of any contract to i contrary, sureties are liable to contribute equally to the extent of default.

Case (b):         S2 and S3 are liable to pay Rs.250/=, Rs.250/= and Rs.500£=, respectively, because sureties are liable to contribute according to the terms of contract, is liable to pay Rs.700/= (being least of one third of Rs.3,000/= and Rs*700/=), S2 is

Case (c):         S will not get anything from P’s estate till the entire debt of Rs. 1,00,000/= is paid to C.

to pay Rs. 1,200/= (being least of Rs. 1,200/= and Rs. 1,200/=)

Reason:                       C: sureties are liable to pay equally subject to the maximum amount guaranteed by each one. Superior if she intends to illustrate the absurdity of behavior, she www.essaynara.com is

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