Page 1

Basis of Distinction 1. Defination

Void agreement An agreement not enforceable by law is said to be void

2. Time when becomes void

It is void from very beginning

3. Restitution

Generally no restitution is granted , however the court may on equitable grounds grant restitution in case of fraud or misrepresentation by minors Such agreements have been mentioned as void in the act. Agreements without consideration, agreements with unlawful object, or consideration and some other agreements have expressly been declared to be void.

4. Description in the act

Void contract A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable It becomes void subsequently due to change in law or change in circumstances Restitution may be granted when the contract is discovered to be void or becomes void

There is no mention of cases of void contracts in the act. They are created by circumstances and the law courts decide whether they have become void or not.


2. Period of validity 3. Legal existence 4. Change in status

5. Causes

Void agreement An agreement not enforceable by law is said to be void It is void from beginning i.e void ab ignition It is nullity , hence , does not exist in the eye of law. Status of void agreement does not change with the change in circumstances

Any agreement is void when it is made with incompetent parties or for unlawful objects and consideration or without consideration or it is expressely declared to be void under the law.

Voidable contract A contract enforceable by law at the option of the aggrieved party , is a voidable contract It is valid till it is avoided by the aggrieved party to the contract Ti has its existence in the eye of the law till it is repudiated Status of such contract change when the aggrieved party elects to avoid it within a reasonable time. It becomes void when the aggrieved party elects to rescind it. A contract is voidable when the consent of the party is caused by coercion or undue influence or fraud or misrepresentation. Moreover parties can treat the contract voidable under the provisions of secs. 39,53 and 55

6. Transfer of title

7. Restitution

8. Damages

The party obtaining goods under void agreement cannot transfer a good title to the third party.

The party obtaining goods under voidable agreement can transfer a good title to the third party if the third party obtains it in good faith and for consideration and the aggrieved party has not avoided the contract before such transfer Parties do not have right to Generally right to restitution is restore the benefits passed on to available if the party elects to the other unless the parties were avoid the conrtact unaware of the impossibility of the performance at the time of agreement or the party to the agreement was minor. No party as a right to get If a party rightfully recinds (i.e. compensation for damages puts an end) the contract he can because such agreement has no claim compensation of damages legal effect. sustained by him due to nonfulfillment of the promise.


Bailment According to section 148 bailment is the delivery of goods by one person to another for some purpose , upon a contract that they shall , when the purpose is accomplished be returned or otherwise disposed of according to the directions of the person delivering them. Pledge or pawn Pledge is a special kind of bailment . section 172 defines the bailment of goods as security for payment of the debt or performance of a promise is called pledge or pawn.


2. Right to use

Bailment The bailment may be for any purpose e.g. use,safe custody transportation etc. Bailee may according to the

Pledge Pledge is only for the purpose of security for payment of a debt or performance of a promise Pledge cannot use the goods

3. Right to sell

4. Consideration 5. Discharge contract

conditions of bailment , use the goods bailed The bailee cannot sell the goods bailed to him Consideration may or may not be in a bailment A contract of bailment is discharged when the purpose is accomplished or after specified time.

pledged A pledgee has a right to sell the goods pledged if default is made by the pawnor In the pledge there is always a consideration A contract of pledge is discharged with the payment of debt or the performance or the sale of security.


2. Object

3. No. of parties

4. No. of contracts

5. Nature of liability

Contract of indemnity 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 called a contract of indemnity. The object of a contract of indemnity is to save the promisee from loss. There are only two parties indemnifier and indemnityholder There is only one contract between both the parties

The liability of indemnifier is primrary and unconditional

Contract of guarantee A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default

The object of a contract of gurantee is to provide the assurance as to performance of promise or discharge of liability. There are three parties – principal , debtor , creditor and surety There are three contracts between the three parties i.e. between (i) principal debtor and creditor (ii) creditor and surety and (iii) the principal debtor and the surety The liability of surety is contigent and secondary.


Condition A condition is a stipulation which

Warranty A warranty is a stipulation which

2. Significance

3. Consequence of breach

4. Treatment

is essential to the main purpose of the contract It is essential to the very purpose of the contract that its nonperformance may be considered as failuare to perfrom the contract The aggrieved party may treat the contract as repudiated A breach of condition may be treated as breach of warranty

is collateral to the main purpose of the contract It is not so essential that a failure to perform it cannot be considered as failure to perform the contract The aggrieved party cannot repudiate the contract but can claim damages A breach of warranty cannot be treated as breach of condition.

UNPAID SELLER Defination of unpaid seller The seller of goods is deemed to be an unpaid seller: (a) When the whole of the price has not been paid or tendered (b) When a bill of exchange or other negotiable instrument has been received as conditional payment, and the condition on which it was received has not been fulfilled by reason of the dishonor of the instrument or otherwise.

MEANING OF DELIVERY “Delivery “ means voluntary transfer of possession of goods from one person to another.

DISTINCTION BETWEEN SALE AND AGREEMENT TO SELL Basis of distinction 1. Nature 2. Transfer of ownership

3. Conveyance of property

Sale It is an executed contract In sale , the ownership of the goods is transferred immediately

A sale implies a contract plus conveyance of property. Therefore a buyer gets a right in rem. He can enjoy the goods

Agreement to sell It is an executor contract Transfer of ownership takes place at a future time or on fulfillment of conditions of agreement to sell In agreement to sell , there is no conveyance of property . it gives buyer the rights against the seller only.

4. Risk of loss

5. Type of goods

against the whole world. In sale risk passes with the ownership

Only the existing and specific goods can be the subject matter of sale

In this case the seller is to bear the risk of loss even though the goods are in possession of the buyer. In case of agreement to sale the goods are usually the future or contigent.