Bailment

Section 148 defines the terms ‘bailment’, ‘bailor’ and ‘bailee’.

A 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 directions of the person delivering them. The person delivering the goods is called the bailor and the person to whom the goods are delivered is called the bailee.

Essentials of Bailment

1.Delivery of the goods for some purpose

2.Return of the goods after the purpose is achieved, or their disposal according to the bailor’s directions.

Kinds of Bailment

Gratuitous Bailment: In gratuitous bailment it is without any consideration for benefit of bailor or bailee.
Non-Gratuitous Bailment: Benefit for both bailor and bailee. Also known as bailment for reward.
Bailment for benefit of bailor: Bailor delivers his goods to bailee for safe custody without any benefit or reward.
Bailment for benefit of bailee: Bailor delivers his goods to a bailee without any benefit for his own use.
Bailment for benefit of bailor and bailee: It is beneficial for both i.e. bailor and bailee.

Duty of Bailor

Section 150 mentions the following duty of bailor in respect of the goods bailed by him:

The bailor is bound to disclose the faults to the bailee in the goods bailed, of which the bailor is aware and materially interfere with the use of them, or expose the bailee to extraordinary risks; and if he does not make such disclosure, he is responsible for the damage arising to bailee directly from such faults.
If the goods are bailed for hire, the bailor is responsible for such damage, whether he was or was not aware of the existence of such fault in the goods bailed.

Duties of Bailee

Duty to take reasonable care of the goods bailed (Section 151 and 152).
Duty not to make unauthorised use of the goods bailed (Section 153 and 154).
Duty not to mix the bailor’s goods with his own goods ( Section 155,156,157).
Duty to return the goods on fulfillment of the purpose (Section 160,161 and 165,166,167).
Duty to deliver to the bailor increase or profit on the goods bailed (Section 163).

Nature of Partnership

When two or more persons join hands to set up a business and share its profits and losses it is called Partnership. Section 4 of the Indian Partnership Act 1932 defines partnership as the ‘relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all’.

Partners are the persons who have entered into partnership individually with one another. Partners collectively are called ‘firm’. The essential features of the partnership are as follows:

Two or More Persons:
There should be at least two persons coming together to form the partnership for a common goal. In other words, the minimum number of partners in a partnership firm can be two.
Indian Partnership Act, 1932 has put no limitations on maximum numbers of partners in a firm. But however, Indian Companies Act, 2013 puts a limit on a number of the partners in a firm as follow:
1.For Banking Business, Partners must be less than or equal to 10.
2.For Any Other Business, Partners must be less than or equal to 20.
3.If the number of partners exceeds the limits, the partnership becomes illegal.

Agreement
The partnership is an agreement between two or more persons who decided to do business and share its profits and losses. To have a legal relationship between the partners, the partnership agreement becomes the basis. The agreement can be in written form or oral form. An oral agreement is equally valid. But, preferably the partners should have a written agreement, in order to avoid disputes in future.

Business
To carry on some business there should be an agreement. Mere co-ownership of a property does not amount to the partnership. The business must also be legal in nature, a partnership to carry out illegal business is not valid.

Mutual Agency
The business of a partnership firm may be carried on by all the partners or any of them acting for all. This statement has two important implications. First, to participate in the conduct of the affairs of its business, every partner is entitled. Second that a relationship of mutual agency between all the partners exists.
For all the other partners, each partner carrying on the business is the principal as well as the agent. He can bind other partners by his acts. And also is bound by the acts of other partners with regard to the business of the firm.

Sharing of Profit
The agreement between partners must be to share profits and losses of a business. Sharing of profits and losses is important. The partnership is not for the purpose of some charitable activity.

Liability of Partnership
Each partner is liable jointly with all the other partners. And also when is a partner, severally liable to the third party for all the acts done by the firm. Liability of the partner is not limited. This implies that for paying off the firm’s debts, his private assets can also be used.

Partnership Deed
Agreement to carry on a business between the partners, partnership comes into existence. The partnership agreement can be either oral or written. The Partnership Act does not require that the agreement must be in writing. But when the agreement is in written form, it is called ‘Partnership Deed’. Partnership deed should be duly signed by the partners, stamped & registered.

Partnership deed generally contains the following details:
1)Names and Addresses of the firm and its main business;
2)Names and Addresses of all partners;
3)A contribution of the amount of capital by each partner;
4)The accounting period of the firm;
5)The date of commencement of partnership;
6)Rules regarding an operation of Bank Accounts;
7)Profit and loss sharing ratio;
8)The rate of interest on capital, loan, drawings, etc;
9)Mode of auditor’s appointment, if any;
10)Salaries, commission, etc, if payable to any partner;
11)The rights, duties, and liabilities of each partner;
12)Treatment of loss arising out of insolvency of one or more partners;
13)Settlement of accounts on the dissolution of the firm;
14)Method of a settlement of disputes among the partners;
15)Rules to be followed in case of admission, retirement, a death of a partner; and
16)Any other matter relating to the conduct of business. Normally, all the matters affecting the relationship of partners amongst themselves are covered in partnership deed.

Duties Of An Agent

Agent and Principal

An “agent” is a person employed to do any act for another, or to represent another in dealing with third person. The person for whom such an act is done, or who is so represented, is called the “principal”. The contract between Principal and Agent is called ‘Contract of Agency’. Section 182 of the act defines the terms “Agent” and “Principal”.

Types of an Agent

Brokers
Factors
Del Ceredere Agents
Auctioneers

Duties Of An Agent

Agent’s duty in conducting principal’s business (Section 211): An agent is bound to conduct the business of his principal according to the directions given by the principal, or, in the absence of any such directions, according to the custom which prevails in doing business of the same kind at the place where the agent conducts such business. When the agent acts otherwise, if any loss be sustained, he must make it good to his principal, and, if any profit accrues, he must account for it. Illustration: B, a broker in whose business it is not the custom to sell on credit, sells goods of A on credit to C, whose credit at the time was very high. C, before payment, becomes insolvent. B must make goods the loss to A.
Skill and diligence required from an agent (Section 212): An agent is bound to conduct the business of the agency with as much skill as is generally possessed by persons engaged in similar business, unless the principal has notice of his want of skill. The agent is always bound to act with reasonable diligence, and to use such skill as he possesses; and to make compensation to his principal in respect of the direct consequences of his own neglect, want of skill or misconduct, but not in respect of loss or damage which are indirectly or remotely caused by such neglect, want of skill or misconduct.
Duty to render proper accounts (Section 213): According to Section 213 of the Indian Contract Act 1872, an agent is bound to render proper accounts to his principal on demand.
Duty to communicate with principal (Section 214): It is the duty of an agent, in cases of difficulty, to use all reasonable diligence in communicating with his principal, and in seeking to obtain his instructions.
Not to deal on his own account: Section 215 of the Indian Contract Act 1872 deals with rights of principal when the agent deals, on his own account, in the business of agency without principal’s consent. Section 215 runs as follows- If an agent deals on his own account in the business of the agency, without first obtaining the consent of his principal and acquainting him with all material circumstances which have come to his own knowledge on the subject, the principal may repudiate the transaction, if the case shows either that any material fact has been dishonestly concealed from him by the agent, or that the dealings of the agent have been disadvantageous to him.
Not to make Secret Profits: Section 216 of the Indian Contract Act, deals with Principal’s right to benefit gained by the agent dealing on his own account in the business of agency. An agent, without the knowledge of his principal, should not deal in the business of agency on his own to make secret profit. Illustrations: A directs B, his agent, to buy a certain house for him. B tells A it cannot be bought, and buys the house for himself. A may, on discovering that B has bought the house, compel him to sell it to A at the price he gave for it.
Duty to pay sums received for principal: According to Section 218 of the said act, an agent is bound to pay to his principal all sums received on his account. It is the duty of an agent to maintain secrecy of the business of agency and should not reveal the confidential matters.
Duty not to delegate his duties (Section 190): When an agent has undertaken to perform certain duties personally, he is not allowed to delegate his duties to another person.

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