 Contract act

 Special contracts :
 Constitution of India
 Law relating to, arbitration and conciliation
 Copyright act, 1957
 Patents act, 1970
 Design act, 2000
 Trade marks act, 1999
 Competition act, 2002
 Inquiry into agreement and dominant position by CCI
 Consumer protection act, 1986
Contract Act
Types of Contract :-

a) Valid Contract –
Every contract fulfilling the essential conditions of lawful object, free consent etc. is a valid
contract. Every agreement enforceable by law is a contract.

b) Void contract
Section 2(i) states that – “a contract which ceases to be enforceable by law becomes void
when it ceases to be enforceable.” Enforceability by law is the essential condition for any
valid contract.

c) Voidable contract
Section 2(j) states that –“ an agreement which is enforceable by law at the option of one or
more of the parties thereto, but not at the option of the other or others, is a voidable contract.”

There should be an option open to either of the parties and not all of them. In case that party
treats it as not enforceable then it becomes a void contract.

d) Illegal contract –
A contract prohibited by law is an illegal contract e.g. contract opposed to public policy or a
contract to murder a person.

e) Unilateral Contract –
It is a one-sided contract in which one party to the contract has certain obligations to do or
not to do something.

f) Bilateral Contract –
It is a contract in which both the parties to the contract have certain obligations to do or not to
do something.

g) Written Contract –
It is a contract in writing and expressed in word, figures etc., signed by the parties to the
contract.

h) Oral Contract –
It is a contract in oral form i.e. Mr. A agrees to sell and Mr. B agrees to buy a car at a price
of Rs. 1,00,000/- orally and act accordingly, then it is an oral contract.

i) Contingent Contract –
The enforcement of the contract depends upon the happening or non-happening of the event
ie contingent on the event.
Definition of Offer: 

Indian Contract Act Section ($) 2(a) states the definition of an offer “ When one person
signifies to another his willingness to do or to abstain from doing something with a
view to obtain the assent of another, to such act, then he is said to have made a
proposal/offer’.

2) Modes of making an Offer: 

The different modes of communication of an offer are as follows:

1. Oral 2. Written 3. Conduct/ implied

3) Legal Rules and Essentials of an offer:

An offer to be legally valid should satisfy all requirements of the definition. Legal rules for a

valid offer are as follows:

a. The offer must be communicated to the other party: The offer is complete
when it has been communicated to the offeree. It must be noted that until the offer is
made, it cannot be accepted.

b. The offer must be made with a view to obtain the consent of the offeree:

Whenever a person is making an offer it mean that he is making it with a view to

obtain the consent of the offeree. As soon as the offeree accepts the same he is bound
by the same.

c. The offer must have its terms defined clear and certain: Whenever the terms of an
offer are vague and uncertain no contract will come into existence. The reason for the
same is when an offer is vague or uncertain it cannot be said what exactly the parties
intend to do.

d. The offer must be capable of creating legal relationship: An offer must be such
that, when accepted it will result in a valid contract. Social invitation cannot be
regarded as an offer since it does not give rise to any legal relationship.
Lapse of an Offer: 

An offer should be accepted before it lapses, i.e. it comes to an end. An offer may come
to an end in any one of the following ways:

a. By communication of notice of revocation: An offer may come to an end by

notice of revocation communicated by the offered.

b. By lapse of time: Sometime the time is fixed for the acceptance of the offer.
And if it is not accepted within the specified time the offer lapses.

c. By failure to fulfill a condition precedent: Sometimes the offer requires that

some condition must be fulfilled before the acceptance of the offer and in such
type of cases the offer lapses if it is accepted without fulfilling the condition.

d. By death or insanity of the offerer: Sometimes the offerer dies or becomes

insane in such type of cases the offer comes to and end if the fact of his death
insanity comes to the knowledge of the acceptor before he makes the
acceptance. The offer comes to an end.

e. By counter offer by the offeree: Sometimes a counter offer is made by the

offeree. In such case, the original offer automatically comes to an end. As
counter offer amount to rejection of an earlier offer.

f. By not accepting the offer, as per prescribed terms and conditions for
usual mode of acceptance: Sometimes certain manner of acceptance is
prescribed in the offer and in such type of cases the offerer can revoke the
offer if it is not accepted according to the prescribed manner.

g. By rejection of the offer by the offeree: Sometimes the offeree rejects the
offer and in such types of cases the offer comes to an end.

h. By change in the law: Sometimes there is a change in law which make the
offer illegal or incapable of performance and in such type of cases, the offer
comes to an end.
Definition of Acceptance:---

Sec 2 (b) of the Indian Contract Act defines acceptance as “ When the person to
whom the proposal is made signifies his assent thereto, the proposal is said to
be accepted. A proposal when accepted becomes a promise.

Acceptance is nothing but giving consent to the offer and a binding contract is created
between the offerer and offeree. i.e. mutually agreed upon rights & obligations.

1) Mode of Acceptance:
The Indian Contract Act defines three different modes of an acceptance.

They are: a) Oral b) Written c) Implied.

3) Legal Rules/Essential of an Acceptance to be valid:

An acceptance is valid when it satisfies the requirements of the definition given under
section 2(b). The legal rules for a valid acceptance are as follows:

a. Acceptance must be communicated: Acceptance is complete when it has been

communicated to the offeree Till this communication does not take pace, it does not
create legal relationship.

b. The acceptance must be communicated to the offerer himself: A valid contract arises
when

acceptance is communicated to the offerer himself.If the acceptance is communicated to

any other person other than the offerer it will not create legal relationship.

c. The acceptance must be communicated by a person who has the authority to accept:
A valid contract arises when acceptance is communicated by a person who has authority
to accept.

d. Acceptance must be absolute and unqualified: A valid contract arises if the acceptance
is absolute and unqualified i.e. the acceptance must be in toto [ in totality]

e. Acceptance must be in the prescribed manner: Sometimes the offer specifies the
manner of acceptance . And if the offer is not accepted in prescribed manner then the
 offerer may reject the acceptance within a reasonable time. This discretion is at the end of
the offer.

f. Acceptance must be given within the time prescribed or within the reasonable time:
Sometimes the time limit is fixed. In such cases the acceptance must be given within the
fixed time period so as to create a valid legal relationship.

g. The acceptance must be given before lapse of offer: A valid contract can arise when
the acceptance is given before the offer has been withdrawn.

h. The acceptance cannot be presumed from silence: Sometimes the acceptor does not
convey his decision to the offerer or keeps silence on the offer given. In such types of
cases this silence does not amount to acceptance. The offerer cannot thrust the burden of
acceptance.

i. The acceptance may be expressed or implied: An acceptance, which is expressed by

words written or spoken, is called an expressed acceptance

j. The acceptance must show an intention that the acceptor is willing to fulfill the
terms and conditions of the offer : A valid contract can take place when the
acceptance is given with the intention of fulfilling the terms and conditions of the
contract and acceptance may otherwise does not create legal relationship.

Lapse of Acceptance:

An acceptance should be given before an offer lapses.

The following are the reasons when an lapse of an acceptance:

a. By lapse of time: An acceptance should be given within the specified or reasonable

time. If acceptance is given after the prescribed time is over it cannot be accepted and
thus an acceptance lapses.

b. By change in the law: sometimes there is change in the law which makes an acceptance
illegal or incapable of performance and in such types of cases, acceptance comes to an
end.e.g ban on sale /mfg of gutkha.
c. By failure to fulfill preceding conditions of the acceptance: There is certain
conditions precedent to acceptance of the offer. If it is accepted without fulfilling the
conditions then an acceptance comes to an end.
d. By mere silence of the acceptor : Mere silence does not convey the decision to the
offerer and such a silence does not create a legal relationship and an acceptance comes
to an end.

e. By lack of proper mode of communication : A valid contract arises when acceptance

is communicated to the offerer. If it is not communicated it does not create legal
relationship and acceptance lapses.

f. By lapse of an offer : when an acceptance is given after lapse of an offer a legal

relationship cannot be created and an acceptance comes to an end.

g. By lack of communication to the offerer : If the acceptance is given to a person other

than offerer it will not create a legal relationship and an acceptance lapses. e.g. advt –
father & son

Legality of acceptance and revocation:

The English author “Anson” has compared offer with acceptance & he states that Offer
can be compared with a train of gunpowder and acceptance can be compared with a
lighted match stick”. The effect of accepting an offer and its revocation can be stated as
follows “Acceptance is to an offer what a lighted match is to a trail of gunpowder.

It produces something, which cannot be recalled or undone. But the producer may have laid
till it has become damp or the man who laid the trail may remove it before the matchstick is
applied so an offer may lapse for want of acceptance or offer into a promise and then it is too
late to remove it”.

This means that when a lighted match is shown to a trail of gunpowder, it explodes and
something happens which cannot be undone. Similarly an offer once accepted becomes a
contract and it creates a legal relationship. However that explosion can be prevented if the
gunpowder is removed before the lighted math is brought near it. Similarly, no contract arises
until the offer is accepted. An offer is like gunpowder, which can be revoked before it is
accepted. But once an acceptance is given, the offer results into a contract. The two basic
points here are:

1. Once the offer is accepted there can be no revocation of the acceptance.

2. There can be no acceptance after revocation of the offer.
An acceptor may cancel his acceptance by a faster mode of communication which will reach earlier
than the acceptance itself.

Definition : Sec. 2 (d) of Indian Contract Act defines consideration –

“ At the desire of the promisor, the promisee or any other person, has done something
or abstains from doing or promises to do something, such an act of abstinence or
promise is called consideration for the given promise”.

DOCTRINE OF PRIVITY OF CONTRACT:

The term privity of contract means stranger to a given contract. As per the doctrine of privity
of contract means a person who is not a party to the given contract cannot sue for carrying out
the promise made by the parties to the contract.

There are certain exceptions to the above mentioned doctrine of privity of contract and
they are as follows

a. Trust created for other benefits (Beneficiary): Sometimes under a given contract
a benefit is given to a person who is not a party to the contract. In such type of cases the
beneficiaries can enforce the contract entered into for the formation and for the benefit of the
trust. The beneficiary is a person who benefits out of the creation of a trust and he is a
stranger to the given contract.

b. Marriage settlement, partition of family arrangements: Sometimes an

agreement is made in connection with family arrangements or partition and a provision is
made in this arrangement or agreement for the benefit of another person in such type of
cases, the person who is going to benefit from this arrangement can enforce the given
contract.

e.g. Partition among industrialist-their legal heirs can enforce the same.

c. Estoppel or acknowledgement of payment : Sometimes a person by the words,

deeds, actions make another person to believe in the existence of certain facts i.e. he
acknowledge his obligation to a third party incurring obligation can file a suit for the
enforcement of the given contract.

d. Charge on a land : In certain type of cases the owner of the land is entitled to
certain rights and obligations created by an agreement affecting the given land when a
person purchases such types of land with the notice of rights and obligations, although he
was not made party to the given agreement.

e. Contracts through an agent : A principle can enforce the contract which due
entered into by his agent, even though he was not a party to the contract, the agent should
have acted within his given authority.
f. Holder in due course of a negotiable instrument : A holder in due course of a
negotiable instrument is a holder who has obtained the negotiable instrument in good faith
and for value he can file a suit against all prior parties for the enforcement of negotiable
instrument.

There are certain exceptions to this given rule where a contract is enforceable even though it
is not supported by the consideration. The exceptions are as follows:

i. Agreement made out of natural love and affection: The following conditions
should be satisfied for the application of this exception –

a. The agreement must be in writing

b. It must be registered

c. The agreement must be based on natural love and affection

d. The parties to the agreement must stand in new relation to each other.

ii. Compensation for voluntary services: The following condition must be satisfied
for the application of this exception –

a. The services should have been rendered voluntarily

b. The services should have been done for the promisor.

iii. Promise to pay time barred debt: The following conditions must be satisfied for
the application of this exception:

a. The promise must be in writing

b. The promise must be definite and expressly stated.

c. The debt must be time barred i.e. the limitation period for recovery of debt

iv. Gift actually made or completed gift : The Indian Contract Act [Sec. 25 (4)]
states that a gift which is actually made is void even though it is made without consideration.
Gift actually made with certain obligations attached to it, whereby the other party has to
fulfill this obligation. The agreement can be enforced even though there is an absence of
consideration and it does not affect the validity of the given contract.

v. Creation of agency : According to the exception a contract of agency made

without consideration is valid. Thus when person is appointed as an agent his appointment is
valid even if there is no consideration. Generally speaking an agent is remunerated by way of
commission for the services rendered. However, no consideration is required at the time of
appointment of the agent.
ESSENTIALS OF VALID CONTRACT
1). Competency/Capacity of the parties:
Section [11] of the Indian Contract Act, states “Every person is competent to enter
into a contract who is of the age of majority according to the law applicable to him and
who is of sound mind and who is not disqualified by any law to enter into a contract”.

The conclusion which can be drawn from the above definition is that the following
persons are incapable of entering into an agreement :

1. Minor

2. Unsound Mind

3. Insolvent Person

Minor : As minor is a person who is not allowed by law to enter into a contract. Indian
Majority Act, 1875 as Under -“ A minor is a person who has not completed his 18 years of
age and in cases where a minor has a guardian appointed by the court then in those
cases the age of minor has been increased to 21 years”.

2). Free Consent:

The Indian Contract Act [Sec. 13] defines the term consent as “Consensus ad idem”

“Two or more persons are said to consent when they agree in the same thing in the same
sense ”. The Indian Contract Act [Sec. 14] defines Free Consent as: “ A consent is
said to be a free consent when it is not caused by

a) Coercion,

b) Undue influence,

c) Mis-representation,

d) Fraud and

e) Mistake”.
i. Coercion: The term coercion means forcibly compelling a person to enter into a
contract. “When any person commits or threatens to commit any act which is forbidden by
the Indian Penal Code or detains any person or his property with an intention of forcing
another person to enter into a contract”.

ii. Undue influence: the term undue influence means the unfair use of once superior
position or power in order to obtain the consent of a person who is in a weaker position. A
contract is said to be induced by undue influence where the relations subsisting between
the parties is in a position to dominate the will of the other and to obtain an unfair advantage
over the other.

iii. Misrepresentation: Representation is a statement or as section made by one person to

another. The conclusion, which can be drawn from the definition, is that it is a statement that
is essential to the given contract and the person making this statement issued it to be true.

iv. Fraud : It is nothing but intentional deliberation or willful misstatement of facts which are
material for the formation of contract. The basic element here is “an intention to deceive”.
The Indian contract Act – Sec 17 defines fraud as follows :

“Fraud means and includes any of the following acts committed by the party to the
contract with an intention to deceive the other party there to”.

v. Mistake: A mistake may be defined as an incorrect benefit about something and it is this
fact which leads the other party to the contract of which the terms and conditions are
understood in a different sense.

Mistake can be of two types :

1 Mistake of Law 2 Mistake of Fact.

3. Lawful Object and Lawful Consideration:

Whenever a contract is entered into it should have a lawful object .It may so happen that the
object might become unlawful over a period of time due to change in law, etc.

Lawful consideration should be in existence in accordance with the laws of the land, e.g.
FEMA

Void agreements:
Those contracts which are not enforceable from the inception.i.e. void –ab-initio :

Types of Void Agreement:

1. Wagering agreement. *

‘When two or more persons differ or have a difference of opinion on any matter, pertaining to
the future, which no party has control over it & when the future events takes place ,either
party losses or wins.’ This is wagering./Betting. These types of agreements are not
enforceable .So the Question of filing a case does not arise. Law legalizes some contracts.

2. Agreement in restrain of a trade

3. Agreement in restrain of legal proceedings. & etc

Performance of Contract
performance of contract can be:

a) Performance of the promise.

b) Offer of performance of the promise (Tender of performance)

Tender of performance:
A contract when entered into need not be performed immediately. The party who is bound to
perform his obligation under the contract, may make an offer to the other party to perform his
obligation. An offer to perform obligation is called ‘Tender of Performance’ And a valid
tender of performance is equivalent to the performance of contract.

The tender of performance is valid if it satisfies the following 2 conditions:

1) The tender must be unconditional. and 2) The tender must be at proper time and
place.

Time and Place for Performance:. Time & Place are important ingredients of any contract.

1) Performance of the promise, where no time is specified & also no application is to be

made. (Reasonable time)

2) Performance of the promise, where time is specified & also no application is to be made.
(usual business hours)

If the parties fail to perform within the specified time the contract is voidable at the option of
the other party.

Appropriation of Payments:- Sometimes, a debtor owes several debts to the

same creditor and makes payment, which is not sufficient to discharge all the debts. In such
type of cases the payment is appropriated i.e. adjusted towards the debts.

DISCHARGE OF CONTRACT
When a contract takes place it creates a mutually agreed upon rights & obligations, when
these rights & obligations come to an end we can state that discharge of contract has
taken place.

The different modes of discharge of contract are as follows: (6 different modes)*

a) By Performance of contract.

b) By Impossibility of performance.

c) By agreement. (Novation, Alteration ,recission, remission)

d) By lapse of time.

e) By Operation of law.

f) By breach of contract

g) Discharge by impossibility of performance:

h) Sometimes the performance of a contract is impossible and in such types of cases the
parties are discharged from their mutual obligation.

Impossibility of performance can be in 2 types.

a) Initial impossibility: It is the impossibility which exist at the time of formation of
a contract i.e. at its inception. Therefore these types of contracts are void ab intio and so it
does not give rise to any obligation.
b) Subsequent impossibility: When the contract has been entered into it is quite
possible to perform the contract but due to subsequent events the performance is not
possible. Such subsequent events the performance is not possible such impossibility is
called subsequent impossibility. It can also be called as post Contractual impossibility.

Doctrine of Frustration The term frustration means subsequent impossibility due to

which the contractual obligation cannot be performed. The grounds of frustration which
makes the contract void is as follows :

1. where the performance of the contract becomes physically impossible.

2. where the basic purpose or the object of contract has failed and it can no longer be
carried out.

The word impossible has not been used here the sense of physical impossibility but in the
sense of impracticable sense to perform the contract. The type of conditions arise due to
change in the circumstances after the contract has been entered into. The parties are
discharged from their liability.

Discharge of a contract by an agreement

a) Novation : The term novation may be defined as follows “substitution of a new contract
for the old one” i.e. existing contract is replaced by a new contract. Novation takes place with
the mutual consent of all the parties to the contract.

b) Alteration : The term alteration may be defined as change in one or more of the terms and
conditions of the contract. Alteration is valid when it is made with the consent of all the
parties to the given contract.

c) Recession : It can be defined as cancellation of some of the terms and conditions of the
contract. A contract may be rescinded by an agreement between the parties at any time
before it is discharged, where a party to a contract fails to perform his obligations the other
party may rescind the contract.
d) Remission : IT can be defined as acceptance of a less amount lesser in the fulfillment of
the terms of the promise i.e. acceptance of a lesser amount than what has been agreed upon.
Remission is a valid what has been agreed upon. Remission is a valid discharge of the
liability to the contract.

e) Merger : It can be defined as when two or more distinct legal personalities merge together
then all the contracts which have been entered into are discharge.

4] Operation of Law :

In certain circumstances during the inception of contract it is perfectly valid upto but due to
the changes in the law ones a period of time, the contract gets discharged i.e. contract is
discharged by operation of law, irrespective of the wishes of the party to the contract is
discharged.

In the full circumstances the contract is discharged by operation of law :

i. Material alteration made in the contract without consent of the parties to the
contract.

ii. Insolvency of the parties to the contract

iii. Death of promisor

This take place where skill and competency is involved discharge of contract takes place by
operation of law.

5] By lapse of time:

A contract has to be performed within the specified time is agreed upon by the parties to a
contract. The Indian Limitation Act, is applicable to all types of contracts whereby it states
that performance of a contract should take place within the specified time and in cases
where time is the essence of contract the parties have to perform their part of obligation
within the given time.

6] By breach of a contract:

A contract when entered into it creates mutually agreed upon rights and obligations and
when one of the parties to contract refuses to perform his part of obligation then it is said that
he has made a breach of contract i.e. he does not abode by the agreed terms and conditions.

The breach of contract can be of two types :**

i] Actual Breach of contract takes place when a party fails to perform his obligations.

ii] Prior to the due date of performance the promisor refuses himself from the performance of
his obligations i.e. it is a declaration by one of the parties to the contract. His intention of not
performing the contracts, before the due date of performance. This is called as anticipatory
breach of contract.
Remedies for Breach of contract
When one of the parties to the given contract refuses to perform his part of the obligation he
is said to have made a breach of contract.

The remedies are as follows

a] Suit for Recession : The term recession may be defined as cancellation of the
contract. Where party commits a breach of contract, the other party is entitled to put to an
end to the contract. He may file a suit for recession of the contract whereby he is freed of his
obligation entered into by the contract.

b] Suit for Damages : The term damages may be defined as the monetary
compensation payable by the law governing damages.

The principle laid down is as follows :

i] General damages are recoverable since these damages arise naturally from a breach of
contract.

ii] Special damages are not always recoverable since it arises due to unusual circumstances
governing the contract

c] Suit for specific performance :

It is an order given by the court, under the Specific Relief Act ordering a certain person or a
party who has made a breach of contract to perform his part of the obligation as agreed upon

The order for specific performance is not as a matter of right and it is at the discretion of the
court to avoid damages because the court does not want get itself involved in the execution
of its order and especially in cases where the contracts are too lengthy or it requires
specialization to monitor the same

d] Suit for Quantum Meruit :

In true legal sense the term quantum meruit means payment made in proportion to work
done. This doctrine is applied where there is not express promise to pay a definite
remuneration for the work done or services rendered. e.g Singer-theatre

e] Suit for injunction : It is an order given by the court restraining a person from doing
certain acts or deeds as mentioned in the order. The injunction is a made of securing the
performance of negative terms in the contract, sometimes which he has promised not to do
and in such type of cases the order for injunction is given. This relief comes under The
Specific Relief Act, Preventive Relief.There can be an interim injunction or perpetual or
mandatory injunction. e.g. Singer/actress agreed to perform under a particular banner then
refuses to do so, injunction can be brought against her not to perform anywhere else.
Special Contracts :
1) Quasi Contract
There are certain relations which resembling those of contracts but they are not contracts
,they are known as quasi contracts. In quasi contract the basic essentials of contract are
totally absent. The general rule of law is that contract is based on legal obligations which
the parties to the given contract mutually agreed upon.

Quasi contracts are contracts which are based on the principles of equity and there is a
moral obligation on the party to perform the contract, moreover there is an no
intention of the parties to create jural relationship between them.

The quasi contract is based on the principle of no one should grow rich at the cost of another
and a person who avails the benefit of services of another person then he ought on equitable
grounds to pay for the same. This is known as doctrine of unjust enrichment.

Following are the circumstances in which quasi-contractual obligations arise. They are as
follows

1] Payment by an interested person: Sometimes a person makes payment, which the other
person is legally bound to pay, and in such type of vases the person who has made the
payment can recover such amount. E.g rented premises-payment of MSEB bill

2]Necessaries supplied to persons : A person who supplies necessaries to person who are
incapable of entering into a contract, then he can recover this expenditure from the minors
estate or when he grows major from his income. There are no contractual obligations
between the guardian and the minor.

3]Non – gratuitous Act: the term non-gratuitous act may be defined as an act or deed done
without any intention of doing it freely i.e. price has to be paid for the benefits avail.

4]Finder of goods : where a person finds goods belonging to another he is said to be finder
of goods. It is not an obligation on a person to take possession of the goods. But if he does so
he is in the position of a bailee and this position expects a person to take due care of goods.

After this the finder of goods has to make reasonable efforts to find out the true owners. The
reasonable efforts has not been defined any where in the act. If he finds the true owner then
he has to return the goods but he has right to claim the compensation for the maintenance of
the goods.

If he does not find the true owner then he has two options :

a) Self utilization of the goods

b) Right to resale the goods

5]Delivery of goods or services rendered by mistake: Sometimes the goods are delivered
or services are rendered by mistake and a person who takes the benefits of the dame, he
ought to pay for it. this is given in the Doctrine of unjust enrichment.

2) Contract of Guarantee
A contract of guarantee is a contract whereby the surety undertake or promises to fulfil all the
obligations entered into by the principal debtor wit the creditor i.e. A contract of guarantee
is a promise by one person to pay the amount due by another person. The following 3 i.e tri –
partite contract..parties are involved in a contract of guarantee :

1) Creditor 2) Principal Debtor 3) Surety.

There are different types of guarantee. The following two types are always used :

i]Specific guarantee : It is a guarantee which is given for a specific performance. It extends

to a single transaction and in this type of guarantee the terms and conditions are specified.

ii]Continuing Guarantee : A continuing guarantee is a guarantee which extends to a

series of transactions and they are of continuous nature. Such guarantee does not come to an
end on the performance of a single transaction.

3) Contingent Contract
The term contingent contract can be defined as a contract which is dependent upon certain
terms and conditions for its performance.

4) Contract of Bailment and Pledge

Bailment is a contract ,which results from the delivery of goods. It implies a sort of
relationship in which the personal property of one person, temporarily, goes into the
possession of another person for some specific purpose. Ownership remains with the person
but temporarily is transferred to another person for some work or service to be rendered.

The delivery of possession to the bailee can be of two types:

a) Actual delivery: Actual delivery takes place when the goods are physically handed over
by the seller or his/her authorized agent to the buyer or his/her agent authorized to take
possession of the goods.

For example, A, the seller of a car hands it over to B, the buyer; it is a case of actual delivery
of the goods.

b) Constructive delivery: In constructive delivery the individual possessing the products

recognizes that he holds the merchandise for the benefit of, and at the disposal of the
purchaser. Constructive delivery is also called attornment.
Delivery of goods for safe custody has been held to be bailment.

Duties of bailor:

1) Duty to disclose faults in the goods bailed.

2) Duty to bear extraordinary expenses.

3) Duty to indemnify the bailee.

4) Duty to receive back the goods..

Duty of Bailee

a. Duty to take reasonable care of the goods bailed.

b. Duty not to make unauthorized use of the goods bailed.

c. Duty to return the goods.

d. Duty to return the increase in the goods bailed.

e. Duty not to set up an adverse title to the goods.

5) Contract of Pledge
“The bailment of goods as security for payment of a debt or for performance of a promise, is
called pledge” The bailor in this case is called ‘Pawnor or Pledgor’ and the bailee is called
the ‘Pawnee or Pledgee’. The pledge is a kind of bailment in which the goods are delivered
by one person to another as a security for 1) Payment of debt 2) Fulfilment of promise. The
parties are Pawnor & Pawnee

6) Contract of Agency
Definition: The term agency may be defined as he relationship that exist between two persons
i.e. the principal and agent. Principal is the person who authorizes certain act and deed to be
done on his behalf and an agent is a person who executes or obeys or implements the
authority or the order given by the principal.

Creation of Agency and the principles of Agency:

The agency relationship is based upon 2 basic principles:

1. Whatever a person can lawfully do himself, he may also do the same through an
agent.

2. He who acts through another is considered to have acted personally creation of

relationship between the principal and agent can take place in the following manner :

1) Agency by express agreement, 2) Agency by implied agreement

3) Agency by operation of law, 4) Agency by necessity

5) Agency by Ratification

Sub Agent: A sub-agent is person who is employed by acting under the control of the
original agent in the business of agent.

Substituted Agent: The term substituted agent may be defined as the agent named by the
original agent to act on behalf of the principal.

Delegation of authority by an agent :An agent is normally expected to perform his part
of the duty as authorized by the principal and generally he cannot further delegate the
work which he has been delegated to him by the principal. This is based on the general
rule “Delegatus non protest delegare” i.e. a delegate cannot further delegate.

The reason behind this is that the principal depends upon agents skill and competency to get
the work done, so he naturally expects the agent not to delegated his authority.

TERMINATION OF AGENCY
A contract of agency creates certain mutual rights and obligations either expressly agreed
upon or implied by law. When this come to an end i.e. neither party has any rights and duties
against each other, it is known as “termination of contract of agency”.

1) By the act of the parties to the contract:

A] Agreement between the principal and the agent

B] Revocation of the agency by the principal

C] Revocation of the agency by the agency

2) By operation of law:

1) Completion of agency business

2) Death of the principal or the agent

3) Insanity of the principal or the agent

4) Insolvency of the principal or the agent

5) Expiry of the time period

6) Destruction of the subject matter of the agency

7) Subsequent event rendering the agency void or unlawful - sometimes the agency is valid
when it is created. But due to subsequent events the business of agency becomes void or
unlawful. In such cases termination of agency takes place.

8) By an act of the parties

7) The Contracts of Indemnity
A Contract whereby 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, is called a contract
of indemnity.

The term is often used in business contracts and in insurance. Indemnity, in simple words, is
protection against future loss.

Summary of types of special contracts:

1. Quasi Contract
2. Contract Of Guarantee
3. Contingent Contract
4. Contract Of Bailment And Pledge
5. Contract Of Pledge
6. Contract Of Agency
7. The Contracts Of Indemnity
CONSTITUTION OF INDIA
Constitution of India came into force on January 26, 1950. It is a Comprehensive document
containing 395 Articles (Divided into 22 Parts)

Preamble: The preamble to the Constitution sets out the aims and aspirations of the people
of India. It is part of the Constitution. The preamble declared India to be a sovereign,
socialist, Secular, Democratic Republic and secures to all its citizens Justice, Liberty,
Equality and Fraternity.

Peculiar Features of Indian Federalism:

The Mode of Formation: Formed by an agreement between a number of sovereign and

Independent states.

Position of the states in the Federation: A Number of safeguards are provided for the
protection of state’s rights as they are independent before the formation of federation.

Citizenship etc.: There is single citizenship in India, with no division of public services or of
the Judiciary

Residuary Power: The constitution of India is neither purely federal nor purely unitary. It is a
combination of both.

Inclusion of Fundamental Rights in Park III of the Constitution : Part III of the Indian
constitution guarantees six categories of Fundamental rights

1. Right to Equality – Articles 14 to 18

2. Right to Freedom – Articles 19 to 22

3. Right against Exploitation – Articles 23 and 24

4. Right to Freedom of Religion – Articles 25 to 28

5. Cultural and Educational Rights – Articles 29 and 30

6. Right to Constitutional Remedies – Articles 32

Doctrine of Severability

 The law becomes invalid only to the extent to which it is inconsistent with the fundamental
Rights.
 Invalid part of the law shall be severed and declared invalid if really it is severable.
 Valid part is capable of giving effect to the legislature’s intent. Otherwise the court shall
declare the entire law as invalid.

Doctrine of Eclipse

 A law made before Commencement of the constitution remains eclipsed or dormant to the
extent it comes under the shadow of the fundamental rights.
  The dormant parts become active again if the prohibition brought about the fundamental
rights is removed by amendment of constitution

Doctrine of Waiver

It is based on the premise that a person is his best judge and that he has the liberty to waive the
enjoyment of such rights as are conferred on him by the state. However, the person should have
knowledge of his rights and that the waiver should be voluntary

Right to Equality ( Article 14 to 18)

Article 14: Equality before the Law and equal protection of the Laws

Article 15: Prohibition of discrimination on grounds of religion etc.

Article 15(1) prohibits the state from discriminating against any citizen on grounds only of :

 Religion, Race, Caste, Sex, Place of Birth or Any of them

Article 15 (4) permit the state to make special provision for the advancement of

 Socially and educationally backward classes of citizens

 Schedule casts and Scheduled tribes

Article 16: Equality of opportunity in matters of public employment.

 Article 16(1) guarantees to all citizens’ equality of opportunity in matters relating to

employment or appointment of office under the state.
 Article 16(2) Prohibits discrimination against a citizen on the grounds of religion, race, caste,
and sex, and descent, place of birth or residence

Article 17: Abolition of Untouchability

Article 18: Abolition of titles

Rights Relating to Freedom ( Article 19 to 22)

Article 19 (1): Guarantees to the citizens of India six freedoms namely

 Freedom of speech and expression

 Assembly peaceably and without arms Article 19(1)(b)
 Form associations or unions Article 19(1)(c)
 Move freely, throughout the territory of India Article 19(1)(d)
 Reside and settle in any part of the territory of India Article 19(1)(e)
 Practice any profession, or to carry on any occupation, trade or business Article 19(1)(g)

Article 20: System of protection, relevant to criminal law, guarantees to all persons :
whether citizen or non-citizen

Article 21: protection of life and personal liberty

Article 22: protection against arrest and detention:

Right to Constitutional Remedies Article 32 guarantees the enforcement of fundamental

rights. It is remedial and not substantive in nature.

Remedies for enforcement of Fundamental Rights

 It is the cardinal principle of jurisprudence that where there is a right there is a

remedy ( ubi jus ibi remedium)
 Article 32 makes it a fundamental right that a person whose fundamental right is
violated has the right to move the Supreme Court by appropriate proceedings for the
enforcement of this fundamental right.
 Supreme court is empowered to issue directions or orders or writs in the nature of
- Habeas corpus
- Mandamus
- Prohibition
- Quo warranto
- Certiorari

ORDINANCE MAKING POWERS

OF THE PRESIDENT

 The ordinance making power will be available to the President only when both the
Houses of Parliament have been prorogued or is otherwise not in session.

 Power is to be exercised by the President on the advice of his council of Ministers

 President must be satisfied about the need of the Ordinance

 Ordinance must be laid before parliament when it re-assembles, and shall

automatically cease to have effect at the expiration of 6 weeks from the date of re-
assembly or before resolutions have been passed disapproving the Ordinance

 The period of 6 weeks will be counted from the latter date if the house reassembles
on different date.

OF THE GOVERNOR:

 Similar to the Ordinance making power of president and have the force of an Act of
the state legislature

 He can make ordinance only when the state legislature or either of the two houses is
not in session
  He must be satisfied that circumstances exist which render it necessary to take
immediate action

 Governor must act with the aid and advises of the council of ministers

Power of Parliament to make Laws on State List

Article 249: In the National Interest:

If the counsil of states declare by a resolution supported by 2/3rd of its Members present
and voting, that it is necessary or expedient in the national interest that parliament should
make a law on that matter.

Article 250: During a proclamation of emergency

While a proclamation of emergency is in operation, Article 250 of the constitution of India

removes restrictions on the legislative authority of the union legislature in relation to the
subjects enumerated in the state list.

Article 356 and 357: Breakdown of Constitutional Machinery in a State

 In case the Governor of a state reports to the President, or he is otherwise satisfied

that the Government of a state cannot be carried on according to the provision of the
Constitution, then president can make a proclamation to that effect.
 The power conferred by Article 356 upon the president is a conditional power. It is
not absolute power.

Interpretation of the Legislative Lists

Plenary Powers:

The first and foremost rule is that if legislative power is granted with respect to a subject and
there are no limitations imposed on the power, then it is to be given the widest scope that its
words are capable of without, rending another item nugatory( Little/no importance)

Harmonious Construction

 Different entries in the different lists are to be interpreted in such a way that a conflict
between them is avoided and each of them is given effect.

 When there is a conflict between two entries in the two different lists the two entries
should be so interpreted, that each of them is given effect and, for that purpose the
scope and meaning of one may be restricted so as to give meaning to the other.
Type of Writs
Meaning of the
Type of Writ Purpose of issue
word
Habeas You may have To release a person who has been detained unlawfully whether in
Corpus the body prison or in private custody.
To secure the performance of public duties by lower court, tribunal
Mandamus We Command
or public authority.
To quash the order already passed by an inferior court, tribunal or
Certiorari To be certified
quasi judicial authority.
To prohibit an inferior court from continuing the proceedings in a
Prohibition -
particular case where it has no jurisdiction to try.
Quo What is your To restrain a person from holding a public office which he is not
Warranto authority? entitled.

LAW RELATING TO, ARBITRATION AND

CONCILIATION
“Arbitration” is the means by which parties to a dispute get the same settled through
the intervention of a third party (or more persons) but without recourse to a court of Law. The
settlement of dispute is arrived by the judgments of the third person (or more persons) who
are called Arbitrators.

Arbitration Agreement has been defined to mean an agreement by parties to submit the
arbitration or certain disputes which have arisen or which may arise between them in respect
of a defined legal relationship whether contractual or not.

1. Should be written and signed by both the parties

2. Person having dispute sends notice to other party
3. Parties should agree, appointment of Arbitrators (Number of arbitrators, if not mentioned
then one arbitrator.
4. Date of arbitration, place and Language.

An Arbitral award is an interim award. The following are the features:

1. The Arbitral award should be in writing

2. The award is to be signed by the member of the arbitral tribunal. However, the
majority of the members of the tribunal is sufficient if the reason for any omitted
signature is stated

The making of an award is a rational process which is accentuated by recoding the reasons.

Arbitral Tribunal, Section 2(1) (d) means a sole arbitrator or a panel of arbitrators.
Appointment of Arbitrators, Section 11: According to this section, parties can agree to
any procedure for appointment of arbitrators. But provisions have been made to ensure
timely appointment as under:

1. Arbitrator could be of any nationality

2. In case of 3 arbitrators – each party shall appoint its own arbitrator. The 2 appointed
arbitrator shall appoint a 3rd arbitrator who will be presiding arbitrator
3. If, within 30 days, the parties fail to appoint arbitrator/ the appointed arbiters fail
to appoint 3rd arbitrator – then Chief Justice will appoint an arbitrator
4. Appointment of sole arbitrator – if parties fail to agree on the appointed arbitrator –
then Chief Justice will appoint an arbitrator
5. Decision on appointment of Arbitrators by Chief Justice is Final.
6. Chief Justice or the persons/institutions designated by him would have due regard to
qualifications of arbitrators agreed between the parties
7. In case of appointment of a sole or third arbitrator in an international
commercial arbitration , the Chief justice of India – will appoint a person of
nationality, other than that of the parties, where the parties are of different
nationalities ( Section 11 (9)

Arbitral Proceedings

Place and Commencement of arbitration, Section 20: The parties are free to agree on
the place of arbitration and if they fail to reach an agreement, the place of arbitration is
determined arbitral tribunal, having regard to the circumstance of the case, including the
convenience of the parties.

Language of arbitration, Section 22: gives freedom to parties to agree upon the language
be used int eh arbitral proceedings. The arbitral tribunal, subject to agreement of parties, has
power to determine the language to be used in the arbitral proceedings.

Arbitration Procedure, Section 23 – 27: Section 23 of the act provides that:

1. Within the period of time agreed upon by the parties as determined by the arbitral
tribunal, the claimant shall state the facts supporting his claim.
2. The parties may submit with their statements all documents they consider to be
relevant or may add a reference to the documents or other evidence they will submit.
3. Unless otherwise agreed by the parties, either party may amend or supplement his
claim or defense during the course of the arbitral proceedings

Power to terminate/continue the proceedings, Section 25: Provides that subject to

agreement between the parties, where without showing sufficient cause, the claimant fails to
communicate his statement of claim with the agreed period, the arbitration proceedings shall
be terminated by the arbitrator.

Similarly, where the respondent fails to communicate his statement of defense within the
predetermined period, the arbitrator shall continue the proceedings without treating such
failure, in itself, as an admission of the claimant’s allegations

Appointment of experts by Arbitral Tribunal, Section 26(1): provides for appointment of

experts subject to agreement between the parties
Amendments: Parties may amend or supplement these statements during the proceedings
unless

1. Parties have agreed otherwise, or

2. Arbitral tribunal considers it inappropriate to allow the amendment or supplement,
due to delay in making it.

Decision by majority, Section 29: Provides that for decision by majority where there is
more than one arbitrator.

Court Assistance, Section 27: Provides that the arbitral tribunal or a party with the
approval of the arbitral tribunal may apply to the court for assistance in taking evidence. For
this purpose the application must specify the name and addresses of the parties and the
arbitrators, general nature of the claim and the relief sought and the evidence to be obtained.

Jurisdiction of Arbitral Tribunals: The Arbitral tribunal is empowered to rule its own
jurisdiction including any objections in relation to existence and validity of the arbitration
agreement.

“Conciliation” is an informal process in which the conciliator (Third Party) tries to bring
the disputants to agreement. He does this by lowering tensions, improving communications,
interpreting issues, providing technical assistance and bringing about a negotiated
settlement.

Differences between Conciliation and Arbitration

Arbitration
1. The decision Is known as arbitral
award and is signed by the arbitral
tribunal members
2. Parties cannot appoint even number
of arbitrators
3. Arbitrators can be appointed even
before dispute arises
Conciliation
1. It is known as settlement and is
signed by the parties concerned
2. The number of conciliator can be
even
3. Appointed only after the dispute has
arisen
COPYRIGHT ACT, 1957
Copyright is right of artist, author and producer of films etc., who have created a work by use of their
artistic skills.

Copyright is an exclusive right to reproduce or authorize another to reproduce artistic, dramatic,

literary or musical works by Copyright Act.

It also extends to sound broadcasting. Cinematograph films and television broadcasts including cable
television.

Object of copyright

Copyright protects skill, labour and capital employed by the author.

Its object is to protect the writer and author from the unlawful reproduction, plagiarism, piracy,
copying and imitation

Nature of copyright

 Copyright is negative in nature.

 It is intangible asset.
 It is not a right in novelty of ideas.
 Copyright is a beneficial interest in movable property.
 It can be transferred as per any beneficial interest in movable property.

Copyright protects the form and not ideas. A second person can produce identical result and enjoy
a copyright in that work using the same idea, provided it is arrived at by an independent process.

Example:

Photograph of a building can have copyright and it cannot be reproduced without the permission of
photographer. However, another person is at full liberty to take photograph of the same building.

Communication to public

“Communication” means making any work available for being seen or heard or otherwise enjoyed by
the public directly or by means of display or diffusion other than by issuing copies of such work
regardless of whether any member of the public actually sees, hears or otherwise enjoys the work.

Adaptation

“Adaptation” means:

Conversion of dramatic work into non-dramatic work.

 Conversion of literary or dramatic work or any version of work in which story is converted
by means of pictures in a book, newspaper, magazine etc.
 Transcription of any musical work.
 Use of any work involving its re-arrangement or alteration.
Example: Making a “comic picture” series of an artistic or literary work would amount to its
adaptation.

Publication

“Publication” means making a work available to the public by :

 Issue of copies; or
 Communicating the work to public.

REGISTRATION OF COPYRIGHT
 Registration of Copyright is optional.
 Copyright may be registered with Registrar of Copyrights.
 Following person can apply for registration of copyright:
 Author, publisher, or owner of work
 Any person interested in work

RIGHTS OF COPYRIGHT OWNER

As per Section 14, Copyright means exclusive right to do any of the following acts in respect
of a work or any substantial part thereof:
Rights in case of  To reproduce the work in any material form including the storing of it
literary, in any medium by electronic means.
dramatic or  To issue copies of work to the public. This clause does not apply to
musical work copies , which are already in circulation.
 To perform work in public or communicate to public.
 To make any cinematograph film or sound recording.
 To make translation to make adaptation of wok.
 To do, in relation to translation or an adaptation of work, any of the
aforesaid acts mentioned above.
Rights in case of  To do any of the acts specified above in relation to literary work.
computer  To sell or give on commercial rental or offer to sale or for commercial
programme rental any copy of the computer programme. However, such
“Commercial rental” does not apply in respect of computer
programmes where the programme itself is not the essential object of
the rental.
Rights in case of  To reproduce in any material form including depiction in two
Artistic Work dimensions from three dimensions or vice versa.
 To communicate work to public.
 To issue copies of work to the public which are not already in
circulation
 To include the work in any cinematograph film.
 To make any adaptation of the work.
 To do in relation to an adaptation of the work, any of the acts specified
as above.
Rights in case of  To make a copy of the film, including a photograph of any image
Cinematograph forming part thereof.
Film  To sell or give on hire of offer for sale or hire, any copy of the film. It
does not matter whether or not such copy was sold or given on hire on
 earlier occasions.
 To communicate the work to public.
Rights in case of  To make any other sound recording embodying it.
sound recording  To sell or give on hire of offer for sale or hire, any copy of the film. It
does not matter whether or not such copy was sold or given on hire on
earlier occasions.
 To communicate the sound recording to public.
Performer’s  Performer has exclusive right to do or authorize to do any person
right – Sections following act:
38, 38 B  To make sound recording or visual recording of performance.
 To make reproduction of any recording of his performance.
 To issue copies to public or communicate to public his work.
 To sell or give on commercial rental basis copy of recording.
 To broadcast the performance.
 Author or performer has moral right available for his work even after
assignment of work. Moral rights are separate from economic rights.
 Moral rights means author or performer has right to take action and
claim damages against any person for distortion, mutilation,
modification or other acts in relation to work.
 Performer of work has moral right where distortion, mutilation,
modification or other acts in relation to work is prejudicial to his
reputation.

OWNERSHIP OF COPYRIGHT
Normally, author of work is the first owner. – Section 17

Right of author is subject to following limitations:

 Proprietor of newspaper or magazine will be the owner, if the author of literary,

dramatic or artistic work is in his employment. This right is only in respect of publication
in any newspaper, magazine etc.
 If a photograph, painting or portrait is done on payment at instance of a person; such
person will be the owner of copyright.
 In case of any work done in the course of author’s employment, the employer will be
first owner.
 Person delivering the speech will be first owner, unless he delivers the speech on behalf
of some other person.
 In case of Government work, Government is first owner. Government work means work
made or published under direction or control of any department of Government.

International organizations notified by Central Government under Section 41 in respect of foreign

work to which they are eligible to hold copyright.

ASSIGNMENT OF COPYRIGHT
Assignment means owner transfer his ownership in copyright. Assignment is possible for existing or
future work. Assignment in future work will take effect only when the work comes into existence.
Effect of Assignment

After assignment, the assignee gets rights assigned and balance rights remain with the assignor.
Copyrights are a bundle of rights and hence owner may assign the whole or only some of them.

Example: The producer had assigned all rights of negatives of a film to an assignee. Producer
continues to be original author of the film. He can assign TV and video rights to others. Assignee can
be considered as owner during period of assignment.

Lapse of Assignment

If the assignee does not make any use of rights assigned to him within a period of one year from
date of assignment, the assignment will be deemed to have lapsed, unless otherwise specified in the
agreement.

Dispute

Copyright Board will decide disputes regarding assignments after hearing both sides.

Copyright Board can pass order regarding:

 Revocation of assignment if assignee does not sufficiently exercise the rights assigned to
him – e.g., publisher acquires right, but does not publish the book.
 Recovery of royalty payable.
 Revocation of assignment if the terms are harsh to the assignor if the assignor is an
author.
 Any other order as it may deem fit.

LICENCES OF COPYRIGHT
Copyrighted work can be licenced by owner in any of following methods:

 Voluntary licence
 Owner of copyright can grant licence in writing to another person.
 Future work can also be licenced, but the licence takes effect only when the work
comes in existence.
 Such licence is normally for re-publication, performance in public or communication to
public.
 Provisions as applicable to assignment i.e. period, territorial assignment, resolution of
dispute by Copyright Board as applicable to assignment are also applicable to licence.

 Compulsory licence for published work

 If owner does not grant permission for republication, performance or communication
to public, Copyright Board can be complaint by any person.
 Copyright Board should grant opportunity of being heard and after inquiry, if it is
satisfied, direct registrar of copyright to grant licence
 Registrar of Copyrights to grant compulsory licence to complainant on such terms and
conditions as it deems fit.
  Compulsory licence for unpublished work
 If owner of copyright is dead or unknown or cannot be traced, Copyright Board can
grant licence to any applicant on such terms as it deems fit.

 Compulsory licence for translation

 Any person can apply to Copyright Board for a licence to produce and publish a
translation of a literary or dramatic work after a period of seven years from
publication.
 This permission can be given if the author denies the permission for such translation.
 If applicant is unable to find the author, he has to give copy of his request to publisher
whose name appears on the work, and licence can be given only after nine months
after such notice was given to the publisher.
 Necessary fee has to be deposited.
 Copyright Board can grant non-exclusive right on terms and conditions and payment of
royalty as it deem fit.
 If the licence is for translation of a foreign work, the same will be subject to condition
that the copy of translation shall not be exported outside India and this condition shall
be printed on each copy of the translation.

INFRINGEMENT OF COPYRIGHT
If any person reproduces work or makes copy of copyrighted work without authority or licence from
owner, it is known as infringement of copyright.

What is not infringement of copyright?

Doing any of the following to the work or its translation or adaptation does not amount to
infringement:

 Fair dealing with literary, dramatic, musical or artistic work for private use, research,
criticism or review. The identity of original work must be acknowledged.
 In the case of computer programmes, making backup copies as protection against loss,
destruction or damage to the original programme.
 Fair dealing with a work for reporting current events in a newspaper, magazine or by
broadcast or in a cinematographic films by a photograph. The identity of original work
must be acknowledged.
 Reproduction in a certified copy made as per law.
 Reading in public a reasonable extract from published literary or dramatic work. The
identity of original work must be acknowledged.
 Publication of short passages in a collection bona fide or use of educational institutions.
Not more than two passages of an author should be used by same publisher in five years.
The identity of original work must be acknowledged.
 Reproduction by a teacher or pupil in the course of instruction or in question paper or in
answer paper.
 Playing the recording in closed hall in residential premises or part of activities of club,
which is not established for profit.
  Performance by an amateur club or society for non-paying audience or for benefit of a
religious institution.
 Making up to three copies in a public library for library use if such book is not available in
India.
 Translation in any Indian language of any Act of legislature if such translation is not
available. However, translation should contain a statement that it is not authorized or
authenticated by Government.
 Exhibition of a film after expiry of the terms of copyright, even if the film is based on a
literary, dramatic or musical work.
 Making recording by broadcasting organization for archival purposes, or for its own
broadcast.

PATENTS ACT, 1970

 Section 2(1) (m) merely states “Patent” means a granted under this Act.
 A patent, generally speaking, is a grant from Government, which confers on the grantee for a
limited period of time the exclusive privilege of making, selling and using the invention for
which a patent has been granted and also of authorizing others to do so.
 Patent is a form of “Industrial Property” or “Intellectual Property”. Like any
property, it can be sold or even mortgaged.
 Patent can be transmitted by operation of law e.g. death of patents, bankruptcy, amalgamation
of company, dissolution of partnership etc.
 Owner can grant license to others to use the patent.

Advantages of patent

 Encourages invention
 Reduces risk of industrial espionage
 Helps in research and spread of knowledge
 It rewards for expenses of development inventions.

Difference between patent and trade secret

 Patents are not “trade secrets:.

 “Coca Cola” formula is a trade secret. It is not published.
 Trade secrets include business and industrial secrets.
 Trade secret principle is based on ‘confidential relationship view’. Thus, an employee leaving a
job may reveal trade secrets to the competitor.
 Patent has to be brought in public domain and has to be published. In return, the inventor gets
exclusive right for specified period for commercial exploitation of his idea, with reward for
creative efforts.
PATENTABILITY
Following are requirements of patent:

 The subject matter should be new. This is test of “novelty”.

 It should be useful. This is test of “utility”
 It should be an ‘invention’. It must involve an inventive step. It should be non-obvious. It
should not be more “discovery”.
 It should be a manner of manufacture, i.e. it should be capable of industrial application.
 “Vendibility” test (i.e. test of marketability) is important. The subject matter should have
commercial purpose.
 Patent can be in respect of substance or in respect of a process.
 Any invention which satisfies the definition of the invention given in the Act may be
patented.
 “Invention” means a new product or process involving an inventive step and capable of
industrial application.
 “Inventive Step” means a feature that makes the invention not obvious to a person
skilled in that art. – coming up with a new way to arrive at a solution
 “Capable of industrial application,” in relation to invention, means that the invention is
capable of being made or used in an industry.

What can’t be patented? Or what are not inventions?

The following are not “inventions” within the meaning of Section 3 of the Act

 An invention which is frivolous or which claims anything obviously contrary to well

established natural laws.
 An invention the primary our intended use of commercial exploitation of which could be
contrary to public order or morality or which causes serious prejudice to human, animal or
plant life or health or to the environment.
 The mere discovery of a scientific principle or the formulation of an abstract theory or
discovery of any living thing or non-living substance occurring in nature.
 A method of agriculture or horticulture.
 A mere scheme or rule or method of performing mental act or method of playing game.
 A mathematical or business method or a computer program per se or algorithms.

As per Section 4 of the Act, no patent shall be granted in respect of an invention relating to atomic
energy.

Following inventions can’t be granted patent:

 If its use contrary to law
 It is mere discovery
 If it is aggregation of properties by mere mixture or re-arrangement or duplication
 If it is method of agriculture or horticulture
 If it is process of medical treatment of humans, animals or plants
 If it is computer program, literary or artistic work
 Inventions based on traditional knowledge
PROCEDURE FOR GRANT OF PATENT
Following person can make an application for registration of patent:

 Any person claiming to be the true and first inventor of the invention.
 Assignee of the person who claiming to be the true and first investor of invention.
 Legal representative of any deceased person who immediately before his death was entitled
to make an application.

OPPOSITION TO GRANT PATENT

Grounds on which application can be opposed are as follows :

 Applicant wrongfully obtained the invention.

 Invention was published before the priority date in India or elsewhere.
 Invention is already claimed in an application having earlier priority claim.
 Invention was publicly known or publicly used before priority date of claim.
 Invention claimed is obvious and does not involve any inventive step.
 Subject of claim is not an invention or is not patentable.
 Complete specification does not sufficiently & clearly describe the invention or the
method by which it is to be performed.
 Applicant has failed to disclose information required under the Act.
 In case of convention application, the application was not made within 12 months from
date of first application in convention country.
  Complete specification does not disclose or wrongly mentions the source or geographical
origin of biological material used for invention.
 The invention is anticipated having regard to knowledge available within any local or
indigenous community in India or elsewhere.

VARIETIES OF PATENT OR KINDS OF PATENTS

 Ordinary patent
 An ordinary patent is a patent normally obtained.

 Patent of Addition
 Patent of Addition is a patent for improvement in or modification of an invention for
which invention a patent has already been applied for or granted.
 Application for patent of addition can be made after a patent in respect of ‘main
invention’ has already been obtained or application for the same has already been filed.
 A patent of addition remains in force only as long as the patent for the original
invention remains in force.

 Patent in respect of convention

 Convention application is made in Convention Country. Convention application is
different from “International Application”.
 Convention application for patent has to be first made in the Convention Country. This
is called “Basic application’.

TERMS OR PERIOD OR LIFE OF PATENT

Patent is valid for 20 years from date of filing the application for patent.

Annual renewal fees is paid every year on expiry of 2nd year to keep patent

 In the following situations patent will lapse:

 If renewal fees are not paid.
 When period of 20 years are expired.
 The prescribed period for the payment of the renewal fees in respect of Patents granted
under the Act is extendible to a period not exceeding 6 months by making a request to
the Controller on the prescribed Form along with the prescribed fees.

Restoration of lapsed patent

 A patent lapses for non-payment of renewal fees.

 Patent can be restored by making application in Form 15 within 18 months from date of lapse.

REVOCATION OF PATENT

 Revocation by High Court

 Revocation of patent in public interest
 Revocation of patent for security of India
RIGHT OF PATENTEE
 In case of product patent, the exclusive right to prevent third parties, who do not have his
consent, from the act of making, using, offering for sale, selling or importing for those
purposes that product in India.
 In case of process patent, the exclusive right to prevent third parties, who do not have his
consent, from the act of using that process, and from the act of using, offering for sale,
selling or importing for those purposes the product directly obtained from that process, in
India.
 If the patent is granted to two or more persons, each of those persons is entitled to an
equal undivided share in patent – Section 50
 To assign patent.
 To surrender patent.
 Patentee can assign, licence, mortgage or create other interest in his rights in favour of any
other person. – This is called Assignment and must be in writing.

SURRENDER OF PATENT
 A patentee can any time surrender his patent by giving notice to Controller.
 The Controller will issue advertisement application for surrender of patents in official journal
and invite objections.
 The controller of Patents after hearing can accept the surrender and then revoke the patent.

INFRINGMENT OF PATENT
 Infringement means violating the statutory rights of patentee.
 Infringement is the violation of monopoly rights given to patentee.

What constitutes infringement?

 In case of product patent, the right is infringed when that article is made by someone else by
any process (i.e. same process or any other process).
 In case of process patent, the right is infringed when other person make the product by same
process.

What is not infringement?

Following will not be treated as infringement:

 Making / constructing/testing/using/selling of patented invention solely for uses reasonably

related to development and submission of information required under any law in force in
India or abroad.
 Importation of patented products by any person who is authorized to sell or distribute the
product in India.

Relief or claim for infringement

 Damages and a share of profit to patentee.

 Injunction on infringee on the terms the Court may deem fit.
PATENT AGENT
Patent application is highly technical. In view of the technical and specialized nature of the
provisions of the Act and the Rules, it is advisable to have an experienced attorney or patent agent.
DESIGN ACT, 2000
Design Act protects external aspect of design of article and not the technical or functional aspects of
design of a product.

Industrial or product’s designs are registerable under Designs At while purely artistic works are
protected under Copyright Act.

“Design” means only the features of shape, configuration, pattern, ornament or composition of
lines or colours applied to any article

“Article’ means an article of manufacture and any substance, artificial or partly artificial and partly
natural; and includes any part of an article capable of being made or sold separately.

Thus, ‘article’ has to be an article of manufacture. It has to be movable.

DIFFERENCE BETWEEN DESIGN, PATENT AND TRADEMARK

Difference between design and patent

 Patent is granted for some new and useful functional aspects, i.e. new constructional features
of a product, or novel manufacturing process to obtain product.
 A registerable design is not concerned with the aspect of how it is made or assembled or how it
functions. It deals with external appearance.
 The similarity is that both patent and design get protection only for limited period.

Difference between trademark and design

 Design is registerable for a limited period – maximum 15 years. There is no such restriction on
Trade Mark.
 Design is not registerable, if it was ‘published’ prior to making of registration. There is no such
restriction on Trade Mark.
 Design or pattern covers whole body of goods and forms part and parcel of goods, while trade
mark is apart and different from the goods for denoting the goods to be identified as belonging
to the person using the trade name.
 Shape of article can be registered as design but not as trade mark.

Prohibition of registration of certain designs

 Which is not new or original.

 Which has been disclosed to public in India or in any other country by publication in
tangible form or by use, prior to application for registration.
 Which is not significantly distinguishable from known designs or combination of known
designs.
 Which contains scandalous or obscene matter.
 A design which is contrary to public order or morality is not registerable
Prior publication disentitles registration

 Design is registerable only if it is new, novel and not published before.

 If it is published before, the novelty is lost.
 “Publication” may be in a prior document or by prior user.
 “Publication” means design must be made available to public or is disclosed to some person
without any obligation to keep it secret.
 Thus, disclosure of design to a person in confidence is not publication.
 However, display of article in shop or exhibition or free gifts of samples may amount to
publication.
 Private or secret use is obviously not publication.

TENURE OF REGISTERED DESIGN

 Registered proprietor of a design gets copyright in the design for ten years from date of
registration.
 It can be renewed for a period of five years on making application in prescribed Form No. 3
with fees before expiration of period of ten years.
 Copyright protection to the design is for ten years from date of application of registration of a
design. This can be extended for one further term of five years (i.e. total fifteen years), if
application is made and necessary fees are paid.

CANCELLATION OF REGISTRATION
Registration can be cancelled if:

 Design was previously registered in India.

 It has been published prior to date of registration.
 Design is not new or original.
 Design is not registerable under the Act.

PROTECTION OF REGISTERED DESIGN

 During existence of registration of design, there is protection against piracy.
 Any person (other than proprietor) cannot:
 Apply the design or its imitation to any article for sale, if it is fraudulent or obvious
imitation.
 Import articles for purpose of sale where the design or its fraudulent or obvious imitation
is applied.
 Publish or expose goods for sale any article, knowing that the design or its fraudulent
imitation has been applied to that article.

The person acting in contravention of above is liable to pay damages for contravention. In addition,
damages may be claimed and injunction can be asked from Court.
TRADE MARKS ACT, 1999
 “Trademark” means a mark capable of being represented graphically and which is capable of
distinguishing the goods or services of one person from those of others.
 It includes shape of goods, their packaging and combination of colours.
 It also includes “Certification trade mark” or “Collectve mark”.
 Internet domain name is also protected under trademark.

Examples : www.taxmann.com, www.icsi.edu.

Trademark includes trade name or business name e.g., ‘Kirloskar’ group of companies.

Mark includes a device, brand, heading, label, ticket, name, signature, word, letter, numeral,
packaging or combination of colors or any combination thereof.

“Goods” means anything, which is subject of trade or manufacture.

“Service” means service of any description, which is made available to potential users.

‘Package’ includes any case, box, container, covering, folder, receptacle, vessel, casket, bottle,
wrapper, label, band, ticket, reel, frame, capsule, cap, lid, stopper and cork.
FUNCTIONS OF TRADE MARK

 It identifies goods or services and its origin.

 It guarantees its unchanged quality
 It advertises goods or services.
 It creates goodwill or brand image of product or service.

REQUIREMENTS OF TRADE MARK

 Capable to distinguish - It should be capable of distinguishing the goods or services of one

person from those of others.
 Use in course of trade - If mark is not used ‘ in course of trade’, the protection is not available.
E.g., ‘Red Cross’ or ‘Ashok Pillar’ is not used in course of trade.
 Capable of being represented graphically - Trade mark may be :
 Letter mark – e.g. IBM, Coca Cola etc.
 Symbol mark
 Brand name identifying the product; or
 Logo-visual depiction of the company and it identifies the company e.g. Maharaja of
Air India.
 Shape of goods and colour - Even shape of goods their packaging and combination of colours
can be a ‘trade mark’.
o Combination of colours can be registered as trademark
o Single colour for the product cannot be registered as a trademark.

Example: If a manufacturer is manufacturing hair oil in blue coloured plastic

container, another manufactuerer can make hair oil in blue coloured plastic
container.

TYPES OF TRADE MARK

 Collective Marks - Collective marks means a trade mark distinguish the good or services of
members of an association of person from others.

Examples: The “CA” device used by the Institute of Chartered Accountants.

The mark “CPA”, used to indicate members of the Society of Certified Public
Accountants.

 Certification trade mark - Certification Trade Mark is a mark capable of distinguishing the goods
or services in connection with which it is used in the course of trade, which are certified by the
proprietor of the mark in respect of origin, material, mode of manufacture or performance of
services, quality, accuracy or other characteristic, from goods or services not so certified.
Examples of such mark are “ISI”, “Agmark” etc.
 Well known trade mark - Well known trade mark in relation to goods or services means a mark
which has become so popular to the substantial segment of the public which uses such goods or
services that the use of such mark in relation to other goods or services would likely to be taken
as indicating a connection in the course of trade or rendering of services between those goods
or services and a person using the mark in relation to the first-mentioned goods or services.
e.g. name Microsoft may not be known to 95% people in India who do not have access to
computer, but that does not mean that Microsoft is not ‘well known’ trade mark

 Associated trade mark - If a trademark is identical with another registered trademark of same
proprietor, the Registrar can require that these marks be registered as “Associated Trade
Marks”, if he is of view that it is likely to deceive or confuse if used by person other than
proprietor.
 Inherently distinctive marks - Inherently distinctive marks are those that are in nature of
invented work these have no assigned meaning and afford the highest protection in law.

Examples: CALTEX and KODAK

REGISTRATION PROCESS OF TRADE MARK

Registration of trademark is optional but advisable. The trademarks are to be registered with
Controller General of Patents, Designs.

 Registration of trademark is valid for 10years

 It can be renewed from time to time.

ASSIGNMENT, TRANSMISSION AND RIGHT TO USE TRADE MARK

 There is difference between transfer of right to use a trademark and assignment of a

trademark.
 “Assignment” of a trademark is taken to be a sale or transfer of the trademark by the owner to
a third party inter vivos.

COMPETITION ACT, 2002

What is meant by anti-competitive agreement?

Any agreement for goods or services, which has appreciable adverse effect on competition in India,
is prohibited. These kind of agreements are known as anti-competitive agreements.

Tie in agreement: Any agreement requiring purchase of goods, as a condition of such purchase, to
purchase some other goods. Tie in agreement is also known as conditional sale or purchase

Exclusive supply agreement: Any agreement restricting in any manner, the purchaser in the course
of his trade from acquiring or otherwise dealing in any goods other than those of the seller or any
other person.

Exclusive distribution agreement: Any agreement, which limits, restricts or withhold output or
supply of any goods or allocate any area or market for disposal or sale of goods.

Refusal of deal: Any agreement, which restricts or is likely to restrict by any method person or class
of persons to whom goods are sold or from whom goods are brought.
Resale price maintenance: Any agreement to sell goods on condition that the price to be charged on
the resale by the purchaser shall be the price stipulated by the seller unless it is clearly stated that
prices lower than those prices may be charged.

Big rigging or collusive bidding: Agreement between enterprises or persons engaged in similar
production or trading of goods or provisions of service, which has effect of eliminating or reduce the
competition for bid.

Types of Anti-competitive contract

Horizontal Agreements

 Horizontal agreements referred to agreements among competitors.

 Horizontal agreements relating to prices, quantities, bids and market sharing are particularly
anti-competitive.
 Here horizontal agreements are those agreements among competitors operating at the same
level in the economic process i.e. enterprises engaged in the same activity.
 Horizontal agreements between enterprises that are at the same stage of the production chain
and in the same market. Horizontal agreements and membership of cartels lead to
unreasonable restrictions of competition and may be presumed to have an appreciable adverse
effect on competition.

Example: The agreements between producers, between whole sellers, or between retailers, dealing
in similar kind of products.

Vertical Agreements

 Vertical agreements are like tie in arrangements; exclusive supply or distribution agreements
and refusal to deal are also generally anti-competitive.
 Vertical agreements are those agreements between Non-competition undertakings operating at
different levels of manufacturing and distribution process.
 Vertical agreements are agreements between enterprises that are at different stages or levels
of the production change and therefore in different markets. An example of this world be an
agreement between a producer and a distributor.
 This includes, Tie in arrangements, Exclusive Supply Agreements, Exclusive Distribution
Agreements, Refusal to Deal and Resale Price Maintenance (RPM).

Example: Agreements between manufacturers of components, manufacturers of products,

between producers and whole-sellers or between producers, whole-seller and retailers.

Effect of Anti-competitive agreement

Anti-competitive agreement, if entered into shall be void.

Exemptions

 Joint venture agreement

  Any exclusive right granted to person for production, supply, distribution or use under Copy
Right Act, 1957, Patent Act, 1970, Trade Mark Act, 1999 or Design Act, 2000 is outside the
purview of the anti-competitive agreement.

Factors for determining adverse effect on competition

 Creation of barriers to new entrants in the market

 Driving existing competitors out of the market
 Foreclosure of competition by hindering entry into the market
 Accrual of benefits to consumers
 Improvements in production or distribution of goods or provision of services
 Promotion of technical, scientific and economic development by means of production or
distribution of goods or provision of services

DOMINANT POSITION

‘Dominant Position’ means a position of strength, enjoyed by an enterprise or group, in the relevant
market, in India, which enables it to:

 Operate independently of competitive forces prevailing in the relevant market or

 Affect its competitors or consumers of the relevant market in its favour.

Enterprise or group shall not abuse its dominant position.

 Agreement by enterprise or group abusing its dominant position is prohibited.

 An enterprise or group is said to have abused its dominant position if it directly or indirectly;
 imposes unfair condition or price
 predatory pricing
 limits or restricts:
1. Production of goods or provision of services or market
2. Technical or scientific development relating to goods or services
  creating barriers to entry
 denying of market access

Meaning of group

 “Group” means two or more enterprises directly or indirectly are in a position to”
 Exercise 26% or more of the voting rights in the other enterprise.
 Appoint more than 50% members of the board of directors in the other enterprise.
 Control the management or affairs of the other enterprise.

Predatory pricing

 “Predatory Pricing” means the sale of goods or provision of services, at a price below cost of
production to reduce competition or eliminate the competitors.
 The main objective of such price is to reduce competition or eliminate the competitors.

COMBINATION
The acquisition of one or more enterprises or merger or amalgamation or control over enterprises is
regarded as combination.

What is base to determine combination?

Act provides assets or turnover as the basis of the parties to determine combination. It can be
created by group of persons or by more than one enterprise or created as a result of, a merger or
amalgamation.
The limits of assets or turnover are set out below:

Parties to combination jointly have Acquiring group and target jointly

or enterprise after merger or have or enterprise created after
amalgamation have; merger or amalgamation have;
In India In India or Outside In India In India or
India Outside India
Assets over Assets over USD 500 Assets over Assets over USD
Rs.1000 Cr. million, (of which at Rs.4000 Cr. 2 billion (of
least Rs.500 Cr. In which at least
India) Rs.500 Cr. In
India)
Or Or Or Or
Turnover Turnover above USD Turnover Turnover above
above 1500 million, (of above USD 6 billion (of
Rs.3000 Cr which at least Rs.12000 Cr. which at least
Rs.1500 Cr. In India). Rs.1500 Cr. In
India)

Meaning of control

‘Control’ includes controlling the affairs or management by:

 One or more enterprises, either jointly or singly, over another enterprise or group.
 One or more groups, either jointly or singly, over another group or enterprise.

Meaning of value of assets

‘Value of assets’ means book value of the assets as per last audited books of account of the
enterprise, in the financial year immediately preceding the financial year in which the date of
proposed merger falls, as reduced by any depreciation.

RELEVANT MARKET
“Relevant Market” means the market, which may be determined by the Commission with reference
to the relevant product market or the relevant geographic market or with reference to both the
markets.

Relevant geographic market

“Relevant Geographic” means a market comprising the area in which the conditions of competition
for supply of goods or provision of services or demand of goods or services are distinctly
homogenous, can be distinguished from the conditions prevailing in the neighbouring areas.

Relevant Product Market

“Relevant Product Market” means a market comprising all those products or services, which are
regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the
products or services, their prices and intended use.
Inquiry into agreement and dominant
position by CCI
 CCI is empowered to enquire:
 Adverse effects of an agreement on competition; and
 Whether an enterprise enjoys dominant position.
 Commission may inquire either on:
 Its own motion; or
 On complain received from any person, consumer or trade association; or
 On a reference made to it by the Central Government, a State Government, or a statutory
authority.

DIRECTOR GENERAL
Appointment  Central Government appoints Director General by notification.
 He is appointed to assist the Commission in conducting inquiry and for
performing such other functions under this Act.
Qualification  The Director General and Additional, Joint, Deputy and Assistant Directors
General or such officers or other employees are appointed from amongst
persons of integrity and outstanding ability and who have experience in
investigation, and knowledge of accountancy, management, business,
public administration, international trade, law or economics and such
other qualifications as may be prescribed.
Salary &  The salary, allowances and other terms and conditions of service of the
Allowances Director General and Additional, Joint, Deputy and Assistant Directors
General or such officers or other employees shall be such as may be
prescribed.
Discharge  Every Additional, Joint, Deputy and Assistant Directors General or such
functions officers or other employees shall exercise his powers, and discharge his
functions, subject to the general control, supervision and direction of the
Director General.
Duty and  The Director General has same powers as are available to Commission
Power – under Civil Court under the Code of Civil Procedure. Following powers are
Section 36 available:
 Summoning and enforcing the attendance of any person and
examining him on oath.
 Requiring the discovery and production of documents.
 Receiving evidence on affidavits.
 Issuing commissions for the examination of witnesses or documents.
 It has also the power to search and seizure of the record of any person in
respect of which an investigation has been directed by the Commission.
 DG has duty to assist Commission in investigation into any provisions of
Act.
 DG is bound to follow direction issued by Commission.
CONSUMER PROTECTION ACT, 1986
Definition of Consumer
 ‘Consumer’ means any person who, -
 buys any goods:
 for a consideration which has been paid or promised or partly paid partly promised, or
under any system of deferred payment and includes
 any user of such goods other than the person who buys such goods for consideration
paid or promised or partly paid or partly promised, or under any system of deferred
payment.
 When such use is made with the approval of such person, but does not include a person
who obtains such goods for resale or for any commercial purpose; or
 Hires or avails of any services
 For a consideration which has been paid or promised or partly paid and partly
promised, or under any system of deferred payment and
 Includes any beneficiary of such services other than the person who hires or avails of the
services for consideration paid or promised, or partly paid and partly promised, or under
any system of deferred payment,
 When such services are availed of with the approval of the first mentioned person but
do not include a person who avails of such services for any commercial purpose.

Commercial purpose

“Commercial Purpose” does not include use by a person of goods bought and used by him and
services availed by him exclusively for the purposes of earning his livelihood by means of self-
employment

Example: Purchase of car for running it as taxi for commercial purpose.

Coverage of definition

Definition of Consumer covers:

 One who buys goods for a consideration for personal use

 One who uses such goods with permission of buyer of goods
 One who obtains goods on hire purchase or lease
 One who hires or avails of any services for a consideration
 One who uses the services with permission of person who has hired the services
 One who obtains services on deferred payment basis – i.e. hire purchase or lease
 One who buys goods or avails services exclusively for purpose of earning his livelihood as
self-employment.
Who is not consumer?

The word ‘Consumer” does not include:

 One who buys goods or avails services for commercial purposes

 One who has not bought the goods

Person buying goods for self-employment is a consumer

 When goods are bought for commercial purposes and such purchase satisfy the following
criteria:
 The foods are used by the buyer himself;
 Exclusively for the purpose of earning his livelihood;
 By means of self-employment
 Then such use would not be termed as use for commercial purposes under the Act, and
the user is recognized as a consumer.

Examples:

 A buys a truck for plying it as a public carrier by himself – A is a consumer.

 A buys a truck and hires a driver to ply it – A is not a consumer.

However, if such a buyer takes assistance of two or more persons to help him in operating the
vehicle or machine, etc. he does not cease to be a consumer.

Rights of consumer

 The Act protects following rights of the consumers:

 Right of protection from marketing of the goods and services which are hazardous to life
and property.
 Right to be informed about the quality, quantity, purity, standard and price of the goods or
services, so the consumers are protected from the unfair trade practices.
 Right to have access to variety of the goods and services at competitive prices.
 Right to be heard and to be assured that consumers’ interests will receive due
consideration
 Right to stop unfair trade practices, restrictive trade practices and exploitation of
consumers.
 Right to consumer education.
 Right of speedy and simple redressal to consumer disputes.

SERVICE

“Service” means service of any description,

 which is made available to potential users and includes:

 but not limited to, the provision of facilities in connection with banking, financing,
insurance, transport, processing, supply of electrical or other energy, board or lodging or
both, housing construction, entertainment, amusement or the purveying a news or other
information,
  but does not include rendering of any service free of charge or under a contract of personal
service.

From the definition given in above paragraph, it can be understood that service may be of any
description and related to any sector if it satisfy the following criteria:

 Service is made available to the potential users, i.e., service not only to the actual users but
also to those who are capable of using it.
 It shall not be free of charge, e.g. , the medical service rendered free of charge in
Government hospital is not a service under the Act.
 It shall not be under a contract of personal service.

Difference between “contract of service” and “contract for service”

 When we talk about “service” under the Consumer Protection Act, we take it as a regular
commercial transaction. Thus, the services rendered under the contract of personal service are
specifically excluded from the definition.
 The expression “Contract of Personal Service” is not defined under the Act. At the same time,
contract of personal service is not recognized under Act.
 In common parlance, it means – a contract to render service in a private capacity to an
individual.
 For example, where a servant enters into an agreement with a master for employment, or
where a landlord agrees to supply water to his tenant, these are the contracts of personal
service.
 The idea is that under a personal service relationship, a person can discontinue the service at any
time according to his will and he need not approach Consumer Forum to complain about
deficiency in service.
 In case of “Contract of Personal Service”, the service seeker can order or require what is to be
done and how it should be done.
 Like a master can tell his servant to bring goods from a particular place. However, in a “Contract
for Personal Service”, the service seeker can tell only what is to be done. How the work will be
done is at the wish of the performer. Like when a person gives a suit to the tailor for stitching, he
does not tell him which method he should use to stitch it.
 A contract of service on other hand implies master-servant relationship and involve obligation to
obey orders in work.

Deficiency in service

 “Deficiency” means any fault, imperfection or shortcoming.

 In the quality, quantity, potency, purity or standard,
 Which is required to be maintained by or under any law for the time being in force or
 Has been undertaken to be performed by a person in pursuance of a contract or otherwise
in relation to any service.

Example: Insurance Company is not settling valid claim and making unnecessary delay in
payment.