Drafting and Conveyancing Relating to Various Deeds and Documents-I – CS Professional Study Material

Chapter 4 Drafting and Conveyancing Relating to Various Deeds and Documents-I – CS Professional Drafting, Pleadings and Appearances Notes is designed strictly as per the latest syllabus and exam pattern.

Drafting and Conveyancing Relating to Various Deeds and Documents-I – Drafting, Pleadings and Appearances Study Material

Question 1.
Write a note on the following:
Arbitration agreements (Dec 2012, 4 marks)
Answer:
Arbitration agreements
The ‘arbitration agreement’ means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of defined relationship whether contractual or not.

It may be in the form of an arbitration clause in a contract or in the form of a separate agreement.
It has to be in writing.
It is in writing if it is contained in a document signed by the parties, or in

an exchange of letters, telex telegrams or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of agreement is alleged by one party and not denied by the other.

Note: The important elements of the arbitration agreement is the consent in writing to submit dispute to arbitration. Consent in writing implies the application of mind to the reference of dispute to arbitration in accordance with Arbitration and Conciliation law and the binding nature of the award made thereunder.

Question 2.
Write a note on the following:
‘Award’ under the Arbitration and Conciliation Act, 1996. (June 2013, 4 marks)
Answer:
Award means the decision of the arbitrator to whom the dispute is referred. Under Section 2(1) (c) of the Arbitration and Conciliation Act, 1996 arbitral award includes “an interim award”.

Requisites of an Award :
The general requisites of an award are :
(a) the law requires that the award shall be made in writing and signed by all the members of the arbitral tribunal or by the majority of them if the reason for any omitted signature is stated, stating its date and the place of arbitration.
(b) it must be consistent with the submission;
(c) it must be certain;
(d) it must be fair to the parties;
(e) it must be final;
(f) its implementation must be possible;
(g) the award must state the reasons upon which it is based.

Question 3.
Write notes on the following :
(i) Types of e-contracts
(ii) Collaboration agreements. (June 2014, 4 marks each)
Answer:
(i) There are three types of c-contract:
(1) Click-wrap or Web-wrap Agreements :
These are the agreements which we generally come across while surfing internet such as “I AGREE” to the terms or “I DISAGREE” to the above conditions. A click-wrap agreement is mostly found as part of the installation process of software packages. It is also called a “click through” agreement or click-wrap license.

(a) Type and Click where the user must type “I accept” or other specified words in an on-screen box and the click a “Submit” or similar button. This displays acceptance of the terms of the contract.

(b) Icon Clicking where the user must click on an “OK” or “I Agree” button on a dialog box or pop-up window. A user indicates rejection by clicking “CANCEL” or closing the window. Upon rejection, the user can no longer use or purchase the product or service.

(2) The Shrinkwrap Agreements :
Shrink wrap contracts are license agreements or other terms and conditions which can only be read and accepted by the consumer after opening the product like CD ROM of software. The terms and conditions are printed on the cover of CD ROM. Sometimes additional terms are imposed when such licenses appear on the screen when the CD is downloaded to the computer. The user has right to return if the new terms and conditions are not to his liking.

(3) Electronic Data Interchange or (EDI) : These contracts used in trade transactions which enables the transfer of data from one computer to another, in such a way that each transaction in the trading cycle (for example, commencing from the receipt of an order from an overseas buyer, through the preparation and lodgment of export and other official documents, leading eventually to the shipment of the goods) can be processed with virtually no paper work.

(ii) Collaboration Agreements :
When two parties join hands for exchange of technical know-how, technical designs and drawings; training of technical personnel of one of the parties in the manufacturing and/or research and development divisions of the other party; continuous provision of technical, administrative and/or managerial services, they are said to be collaborating in a desired venture.

The word “COLLABORATION” has, however, acquired a specific meaning, which refers to co-operation between a party within India and a party abroad.

The agreements drawn and executed between such collaborating parties are known as “Foreign Collaboration Agreements”. With sophistication and technical advance achieved in the developed countries and motivated by the desire of carrying the country into the twenty-first century, the Indian entrepreneurs are seeking all possible avenues for obtaining technical know-how in the fields of industry, agriculture, mining, oil exploration, power generation, etc.

A large number of Indian industrialists have already entered into long and short-term collaboration arrangements with foreign companies, firms etc.

In order to ensure quick processing of the proposed collaboration arrangements and on a uniform basis, the Central Government has issued guidelines for prospective collaborators so that they submit their proposals in accordance with those guidelines.

Question 4.
Write notes on the following :
Web wrap agreement. (June 2016, 4 marks)
Answer:
Click-wrap or Web-wrap Agreements:
These are the agreements which we generally come across while surfing internet such as “I AGREE” to the terms or “I DISAGREE” to the above conditions. A click-wrap agreement is mostly found as part of the installation process of software packages. It is also called a “click through” agreement or click-wrap license.

Click-wrap agreements can be of the following types:
1. Type and Click where the user must type “I accept” or other specified words in an on-screen box and then click a “Submit” or similar button. This displays acceptance of the terms of the contract. A user cannot proceed to download or view the target information without following these steps.

2. Icon Clicking where the user must click on an “OK” or “I agree” button on a dialog box or pop-up window. A user indicates rejection by clicking “CANCEL” or closing the window. Upon rejection, the user can no longer use or purchase the product or service. A click wrap contract is a “take-it-or-leave-it” type of contract that lacks bargaining power.

Question 5.
Write notes on the following: (June 2017)
(a) Privilege WILL and non-Privilege WILL. (4 marks)
(b) Essentials of E-contracts. (4 marks)
Answer:
(a) Privileged Will
Any soldier being employed in an expedition or engaged in actual warfare, or an airman so employed or engaged, or any mariner being at sea, may, if he has completed the age of eighteen years, dispose of his property by a Wills made in the manner provided in Section 66. Such Wills are called privileged Wills.

Non-privileged Will
Wills made by the persons other than stated above are non-privileged Will. Such Wills are required to be in writing, signed by testator and attested by the two witnesses (except those made by Mohammedans). It is governed by Section 63 of the Indian Succession Act.

(b) Essentials of E-contract
As per the Indian Contract Act, the essentials of a contract are:

An offer or proposal by one party and acceptance of that offer by another party resulting in an agreement consensus-ad- idem.
An intention to create legal relations or an intent to have legal consequences.
The agreement is supported by lawful consideration.
The parties to contract are legally capable of contracting.
Genuine consent between the parties.
The object and consideration of the contract is legal and is not opposed to public policy.
The terms of the contract are certain.
The agreement is capable of being performed i.e., it is not impossible of being performed.

Question 6.
Write notes on the following: (June 2017)
(i) Fidelity Guarantee
(ii) On-line Shopping Agreement between the Service provider and manufacturer.
(iii) Probate and letter of administration. (4 marks each)
Answer:
(i) Fidelity Guarantee
A surety’s liability for the faithful discharge by another of his duties depends in each case on the exact terms of that guarantee. The surety is not discharged from the liability for the principal debtor’s default because the default would not have happened if the creditor had used all the powers of superintending the performance of the debtor’s duty which he could have exercised, because the employer of the servant whose due performance of work is guaranteed does not contract with the surety that he will use the utmost diligence in checking the servant’s work.

If the employer of a servant whose fidelity has been guaranteed continues to employ him even after a proved act of dishonesty without notice to the guarantor, the surety is discharged. That is a basic principle implicit in the very nature of a fidelity guarantee.

The guarantor in such a case guarantees the fidelity and ensures the loss against the risk of infidelity and not the fact of infidelity. If the employer wants to continue a dishonest servant after his dishonesty has been proved then he must give the guarantor notice of the fact of infidelity so that the guarantor may get an opportunity to say whether he would continue his guarantee or not for a man whose infidelity has been proved.

(ii) If XYZ Ltd. wants to offer online shopping services to its customers. XYZ Ltd. would tie-up with manufacturers of books, toys, clothes etc. and offer their products for sale through its website. Some of the products could be stocked in XYZ’s warehouses while others could be stocked with the manufacturers.

Additionally visitors can post reviews, comments, photos etc. on the XYZ’s website. XYZ Ltd. would need to enter into a contract with all its potential customers “before” they place an order for a product using its services.

The important points in regard to On-line shopping Agreement between the Service Provider and manufacturer are:

Customer’s relationship with Service Provider
Acceptance of the terms of the contract
Copyright
Customers duties and obligations
License from Service Provider
Reviews and Comments
Risk of loss
Pricing
Prohibitions
Applicable Law
Limitation of liability
Exclusion of warranties
Ending the relationship between Service Provider and the customer.

(iii) Probate: Probate is a certificate granted under the seal of Competent Court, certifying the Will (a copy whereof is annexure thereto) as the Will of the testator and granting the administration of the estate of the deceased in accordance with that Will to the executor named under the Will.

Letters of Administration : A letter of administration can be obtained from the Court of competent jurisdiction in cases where the testator has failed to appoint an executor under a will or where the executor appointed under a will refuses to act or where he has died before or
after proving the Will but before administration of the estate. Letters of Administration are not always necessary in cases of intestacy of Hindus, Mohammedans, Budhists, Sikhs, Jains, Indian Christians or Parsis. Letter of Administration is always necessary where a person (governed by the Indian Succession Act) dies intestate.

Question 7.
Write notes on the following: (Dec 2017)
(a) Subrogation of Surety to the right of Creditors
(b) Shrink Wrap Agreement
(c) Onerous Gift. (4 marks each)
Answer:
(a) Subrogation of Surety to the Rights of Creditor on Payment:
Section 140 of the Act invests a surety with all the rights which the creditor has against the principal debtor, where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety has made the payment or performed all that he is liable for.

(b) The Shrink-wrap Agreements: Shrink wrap contracts are license agreements or other terms and conditions which can only be read and accepted by the consumer after opening the product like CD ROM of software. The terms and conditions are printed on the cover of CD ROM. Sometimes additional terms are imposed when such licenses appear on the screen when the CD is downloaded to the computer. The user has right to return if the new terms and conditions are not to his liking.

(c) Onerous gift: Lastly reference may also be made to what is known as an onerous gift. It may be that several things are transferred as a gift by single transaction. Whereas some of them are really beneficial the others convey burdensome obligations. The result is that the benefit which it confers is more than counter balanced by the burden it places. For instance, A makes a gift of shares in the companies X and Y. X is prosperous but heavy calls are expected in respect of shares in Y company. The gift is onerous. The rule as laid down in Section 127 is that the donee takes nothing by the gift unless he accepts it fully. Where the gift is in the form of two or more independent transfers to the same person of several things, the donee is at liberty to accept one of them and refuse the other.

Question 8.
Write notes on the following : (Dec 2018)
(a) Click-wrap or Web-wrap Agreements
(b) Outsourcing Agreements (4 marks each)
Answer:
(a) Normally the fundamental shape of e-contracts are the Click-wrap or Web-wrap Agreements; the Shrink-wrap Agreements; the Electronic Data Interchange or (EDI).

These are the agreements which we normally come across while surfing internet such as “I AGREE” to the terms or “I DISAGREE” to the above conditions. A click-wrap agreement is mostly found as part of the installation process of software packages. It is also known a “click through” agreement or click-wrap license.

Click-wrap agreements can be the of the following kinds:
(i) Type and Click where the user must type “I accept” or other specified words in an on-screen box and then click a “Submit” or similar button. This displays acceptance of the terms of the contract. A user cannot proceed to download or view the target information without following these steps.

(ii) Icon Clicking where the user must click on an “Ok” or “I agree” button on a dialog box or pop-up windows. A user indicates rejection by clicking “Cancel” or closing the window. Upon rejection, the user can no longer use or purchase the product or service. A click wrap contract is a “take – it – or leave – it” type of contract that lacks bargaining power.

(b) Outsourcing is the contraction out of a company’s non- core, non- revenue producing activities to specialists. It differs from contracting in that outsourcing is a strategic management tool that involves the restructuring of an organization around what it does best i.e., its core competencies.

The common types of outsourcing are information Technology (IT) outsourcing, Business Process Outsourcing (BPO) and Knowledge Process outsourcing (KPO.)

A good outsourcing agreement is one which provides comprehensive road map of the duties and obligations of both the parties – outsourcer and service provider. It minimizes complications when a dispute arises.

But, many a times people neglect to pay attention while drafting an outsourcing agreement.

Before finalizing an outsourcing agreement, the terms should be throughly discussed and negotiated to avoid any misunderstanding at a later stage.

It is advisable to consult a lawyer before finalizing any outsourcing agreement.

Question 9.
Write note on the following :
Importance of Force Majaure Clause in Commercial contracts. (June 2019, 4 marks)
Answer:
One of the very important provision witnessed in modern commercial contracts relates to Force Majaure clause or excuses for non-performance. This is also referred as ‘Act of God’, which includes circumstances and events like earthquake, floods, tsunami etc., which prevents one party to perform his part of the contract. A “Force Majaure” clause is a contract provision that relieves the parties from performing their contractual obligations when certain circumstances beyond their control arise, making performance inadvisable, commercially impracticable, illegal, or impossible.

This provision defines as to what particular circumstances or events beyond the control of the party would entitle him to delay or refuse the performance of the contract, without incurring liability for damage. It is usual to list the exact circumstances or events, like strike, lockout, riot, civil commotion, Government prohibition, etc. which would provide an excuse to the party to delay or refuse the performance. It may be further provided that events of a similar nature which are beyond the control of the party and which could not have been avoided with due diligence would also furnish the above relief. A force majaure may operate to excuse all or any part of the obligations of one or both parties to agreement.

Question 10.
Distinguish between the following :
‘Performance guarantee’ and ‘fidelity guarantee’. (June 2012, 3 marks)
Answer:
Performance Guarantee : A guarantee which ensures the contracted performance of another person and under which the surety undertakes to compensate the person in whose favour the guarantee is given in the event of failure on the part of person on whose behalf the guarantee is given is called “performance guarantee”.

Fidelity guarantee :
Counter Guarantee and Fidelity Guarantee : A guarantee, guaranteeing an employer against the misconduct of an employee or to answer for the debt or default of another, is called a “fidelity guarantee”.

A guarantee given by the principal debtor to the surety providing him continuing indemnity against any loss or damage that the surety may suffer on account of default on the part of the principal debtor, is called “counter-guarantee”.

Question 11.
Distinguish between the following: (Dec 2014)
(i) ‘Probate’and‘letter of administration’.
(ii) ‘Privileged will’ and ‘unprivileged will’. (4 marks each)
Answer:
Privileged Will : Any soldier being employed in an expedition or engaged in actual warfare, or an airman so employed or engaged, or any mariner being at sea, may, if he has completed the age of eighteen years, dispose of his property by a Wills made in the manner provided in Section 66. Such Wills are called Privileged Wills. Privileged Wills may be made orally and may not always be in writing. If written in handwriting of testator, it need not be signed or attested. It is governed by Sections 65 & 66 of the Indian Succession Act. Unprivileged Will : Wills made by the persons other than stated above are Unprivileged Will. Such Wills are required to be in writing, signed by testator and attested by the two witnesses (except those made by Mohammedans). It is governed by Section 63 of the Indian Succession Act, 1925.

Question 12.
Distinguish between the following:
‘Privileged will’ and ‘unprivileged will’. (June 2015, 4 marks)

Question 13.
Distinguish between the following : (June 2016)
(a) ‘Bank guarantee’ and ‘hypothecation’. (4 marks)
(b) ‘Surety’ and ‘security’. (4 marks)
Answer:
(a) Bank Guarantee : A “bank guarantee” is a guarantee given by a bank on behalf of its client or account-holder to another person with whom the client has entered into a contract to perform some job or to do and call upon the bank to pay the guaranteed amount in the event of the contingency, mentioned in the guarantee, happening or not happening, as the case may be.

Hypothecation : As per Section 2(n) of SARFAESI Act, “Hypothecation” means a charge in or upon any movable property, existing or future, created by a borrower in favour of a secured creditor without delivery of possession of the movable property to such creditor, as a security for financial assistance and includes floating charge and crystallisation of such charge into fixed charge on movable property,

(b) “Surety and Security”:
A person who gives a guarantee is called as surety. Upon fulfilling his obligation, the surety takes over the position and rights of the creditor, under the doctrine of subrogation. Surety is most commonly found in a contract of guarantee.

The property charged and assured for re-payment of debt is referred as security. Security is usually tendered in case of hypothecation.

Question 14.
Distinguish between the following: (Dec 2016)
(a) ‘Continuing guarantee’ and ‘counter guarantee’.
(b) ‘Probate’ and ‘letter of administration’. (4 marks each)
Answer:
(a) Continuing Guarantee and Counter Guarantee:
A guarantee which extends to a series of transactions is called a continuing guarantee. Whereas a guarantee given by the principal debtor to the surety providing him continuing indemnity against any loss or damage that the surety may suffer on account of default on the part of the principal debtor, is called counter guarantee. As per Section 130, a continuing guarantee may be revoked by the surety at any time as to future transactions, by notice to the creditor.

(b) Probate and Letter of Administration:
Probate is a certificate granted under the seal of Competent Court, certifying the Will (a copy whereof is annexure thereto) as the Will of the testator and granting the administration of the estate of the deceased in accordance with that Will to the executor named under the Will. Whereas, A letter of administration can be obtained from the Court of competent jurisdiction in cases where the testator has failed to appoint an executor under a Will or where the executor appointed under a will refuses to act or where he has died before or after proving the Will but before administration of the estate.

Question 15.
Distinguish between the following : (Dec 2019)
(i) BPO and KPO type of outsourcing.
(ii) Hypothecation and pledge.
(iii) License and lease. (4 marks)
Answer: .
(i) Following are the main differences between BPO and KPO type of outsourcing :

Basis	BPO	KPO
Definition	BPO provides services like customer care, technical support through voice processes, tel-marketing, sales, etc.	KPO provides in-depth knowledge, expertise and analysis on complex areas like Legal Services, Business and Market Research, etc.
Stands for	Business Processing Outsourcing	Knowledge Processing Outsourcing
Requires	Good communication skills and basic computer knowledge	Specialized knowledge
Sevices	Low end services	High end service
Process	Pre-defined process	Requires application and under-standing of business
Employees	Not so qualified employees	Skill and expertise of knowledge employees
Expertise in	Process	Knowledge
Relies on	Cost arbitrage	Knowledge arbitrage
Driving force	Volume driven	Insights driven

(ii) The main differences between Hypothecation and Pledge are as under:
1. The pledge can be defined as the form of bailment in which goods are held as security for the payment of the debt or the performance of an obligation. Hypothecation is moreover different from the pledge, in which the collateral asset is not delivered to the lender.

2. The pledge is defined under section 172 of the Indian Contract Act, 1872. On the other hand, Hypothecation is defined under section 2(1 )(n) of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

3. In the pledge, the possession of the asset is transferred, but in the case of hypothecation, possession lies with the debtor only.

4. Parties to the contract of the pledge are called as pawnor (borrower) and Pawnee (lender) whereas in case of hypothecation the parties are known as hypothecator (borrower) and hypothecatee (lender).

5. In the pledge, when the borrower default in payment, the lender can exercise his right to sell the asset to recover the debt amount. However in hypothecation, the lender does not have the possession of goods so he can file a suit to realize his dues to take the possession first and then disposing off them.

(iii) The license is not a lease. The lease and the license both are different. The word “License” under Section 52 of the Indian Easement Act, 1882 is a grant by one person to another or to a definite number of persons, a right to do, or continue to do, in or upon the immovable property of the grantor, something which would, in the absence of such right, be unlawful, and such right does not amount to an easement or an interest in the property, the right is called a license.

A lease of immovable property as per Section 105 of the Transfer of Property Act defined as lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. Lessor, lessee, premium and rent defined.—The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.

In Khalil Ahmed Bashir Ahmed v. Tufelhussein Samasbhai Sarangpurwala, 1988 SCC155, the Supreme Court has held: “In order to determine whether a document created a license or a lease the real test is to ascertain the intention of the parties i.e. whether they intended to create a license or a lease. If the document creates an interest in the property entitling the transferee to enjoyment, then it is a lease; but if it only permits another to make use of the property without exclusive possession, then it is a license.”

Question 16.
Distinguish between the following:
Continuing guarantee and Counter guarantee. (June 2022, 4 marks)

Question 17.
“Hypothecation is an extended form of pledge.” Explain the statement and make suggestions for improvement in the law of hypothecation citing case law(s). (June 2012, 10 marks)
Answer:
” Hypothecation is an extended form of pledge.”
Hypothecation agreement is a document by which legal property in goods passes to the person who lends money on them, but the possession does not pass.

In hypothecation, there must be an intention of the parties to create a security on the property on which the money has been lent of that intention can be established and equity gives effect to it.

(i) Hypothecation may be created orally or in writing in India.

(ii) In hypothecation, the rights of the lender and the borrower are strictly governed by the terms and conditions of the hypothecation agreement executed by the parties.

(iii) Hypothecation is resorted to mostly by banks and other financial institutions for securing the long term and medium term loans on limits of working capital, bill discounting, letters of credit and partnership etc,

(iv) The lending institution take various documents like hypothecation agreement, promissory note, collateral personal guarantees of managing directors etc.

(v) Hypothecation agreement usually covers movable machinery, equipment, stock of finished goods and semi-finished goods, raw material, consumable store etc.

Pledge has been codified by the Indian Contract Act, 1872 as per Section 172 and 176 provides that pledge of goods. A pledge is a bailment of the goods as security for payment of a debt or performance of a promise. The pawnee can retain the goods pledged as security for payment of a debt and is also entitled to receive from the pawner or pledger any extraordinary expenses he incurs for the preservation of the goods pledged with him.

According to Section 176 of the Indian Contract Act, provides that the ‘ right of pawnee and provides that in case of default by the pawnor, the pawnee has right to sue upon the debt and to retain the goods as collateral security and to sell the goods after reasonable notice of the intended sale to the pawner. After such sale, the pawner to redeem the good is extinguished.

However, the pawnee is bound to apply the sale proceeds towards satisfaction of the debt and pay the surplus, If any to the pawner.
Note: In the case of Rehaboth Trader by Partner R vs. Canara Bank and Ors. held that hypothecation of goods is nothing but an extended form of pledge and to pledge means to give the goods as security. Hypothecation means pledge’of goods that is to give goods as security without possession.

Question 18.
State important guidelines for entering into foreign collaboration agreements. (June 2013, 8 marks)
Answer:
Guidelines for entering into Foreign Collaboration Agreements
These guidelines cover the following aspects of foreign collaboration agreements:
1. Investment Where in a foreign collaboration agreement, equity participation is involved, the value of the Shares to be acquired about be brought in cash.

2. Lump sum payment :
The amount agreed to be paid by an Indian party to a foreign collaborator for technology transfer should be paid in three instalments as follows:

one-third to be paid after the agreement has been approved by the Central Government;
one-third on transfer of the technical documents; and
one-third on the commencement of commercial production.

3. Royalty :
Royalty payable to a foreign collaborator has to be calculated on the basis of net ex-factory selling price of the product less excise duties and cost of imported components.

4. Duration of agreement :
Normal period of a foreign collaboration agreement is eight years subject to maximum of ten years. The period is approved by the Government usually for five years from the date of the agreement.

5. Renewal or extension of agreement :
The Central Government may consider an application for renewal of a foreign collaboration agreement or for extension of its period on merit.

6. Remittances :
Remittances to foreign collaborators are allowed only on the basis of the prevailing exchange rates.

7. Sub-licensing :
An agreement shall not normally impose any restriction on the sub-licensing of the technical know-how to other Indian parties. Sub-licensing is, however, subject to the Central Government’s approval.

8. Exports :
No foreign collaboration agreement shall be allowed to contain any restriction on the free export to all countries, except in a case where the foreign collaborator has licensing arrangements in which case the countries concerned shall be specified.

9. Procurement of capital goods etc. :
There should be no restriction on procurement of capital goods, components, spares, raw materials etc. by the Indian party. The Indian collaborator must be free to have control over pricing facility and selling arrangements.

10. Technicians :
The number terms of service, remuneration etc. of technicians to be deputed on either side are subject to approval of the Reserve Bank of India.

11. Training :
Provision shall be made in the agreement for adequate facilities for training of Indian technicians for research and development.

12. Exploitation of Indian patents : Where any item of manufacture is patented in India, the payment of royalty or lump sum to the foreign collaborator should make provision for compensation for use of such patent until its expiry. There should also be provision for manufacture by the Indian company of the said item even after the expiry of the collaboration agreement without making any additional payment.

13. Consultancy :
If the necessity for any consultancy arises, it should be obtained from an Indian company. If, however, in the special circumstances foreign consultancy becomes essential, even then the prime consultant should be an Indian company.

14. Brand Name :
There should be no insistence on the use of foreign brand names on products for sale jn India. There can, however, be no objection for use of foreign brand name on products to be exported to other countries.

15. Indian Laws :
All collaboration agreements shall be subject to Indian laws.

16. Approval of Central Government :
Every foreign collaboration agreement shall be approved by the Central Government.

Question 19.
Briefly list the guidelines for entering into foreign collaboration agreements. (Dec 2013, 10 marks)

Question 20.
Comment on the following : (June 2014)
(a) Hypothecation is a form of transfer of property in goods. (5 marks)
(b) Every person of sound mind, not being a minor, may dispose of his property by a will. (5 marks)
Answer:
(a) Hypothecation Agreement: Hypothecation is a form of transfer of property in goods. Hypothecation agreement is a document by which legal property in goods passes to the person who lends money on them, but the possession does not pass. This form of transfer is not regulated in India by any statute. Neither the Transfer of Property Act, 1882, nor the Indian Contract Act, 1872, nor the Sale of Goods Act, 1930, recognize the non-possessory hypothecation of immovables and the rights and remedies of the parties are regulated by the courts according to the general law of contract.

In hypothecation, there must be an intention of the parties to create a security on the property on which the money has been lent. If that intention can be established, equity gives effect to it.

A hypothecation not merely of moveable existing on the premises at the time but also in respect of moveable which might be subsequently acquired and brought there, is valid though it is not governed by the Transfer of Property Act or by the Indian Contract Act, 1872. An oral or written hypothecation is permitted under the law in India.

Hypothecation agreements usually cover moveable machinery, equipments, stocks of finished and semi-finished goods, raw materials, consumable stores, present and future available in factories and godowns of the borrower and also enroute to the borrower’s factories and book debts. While these items as moveable assets, remain in the possession of the borrower and he has absolute right to convert them, sell them and deal with them in any manner the borrower likes in the course of his business, the legal title vests in the lending institution by virtue of the hypothecation agreement.

Pledge, which is regulated by the Indian Contract Act, 1872, as stated above, technically speaking, cannot exist without bailment or possession.

(b) Section 59 of the Indian Succession Act, 1925 provides for the persons capable of making wills. Accordingly, every person of sound mind not being a minor may dispose of his property by will. A married woman may dispose by will of any property which she could alienate by her own act during her life.

Even persons who are deaf or dumb or blind can make will provided they are able to know what they do by it. Further, a person who is ordinarily insane, may make his will during the interval in which he is of sound mind. However, no person can make a will while he is in a state of mind arising from intoxication or from illness or from any other cause such that he does not know what he is doing.

Question 21.
In the light of judicial pronouncements, discuss the following: (June 2014)
(a) In a contract, if the material terms of the agreement are clear and specific, omission of minor or basic details will not invalidate the agreement. (4 marks)
(b) ‘Relevant considerations’ in constructing a will. (4 marks)
Answer:
(a) An agreement between the parties is an instrument whereby the parties freely agree to perform certain acts or refrain from doing sometimes unilaterally or bilaterally.

The purpose of the instrument is to bind the parties to the terms and conditions agreed upon. The agreement should, therefore, be drafted as deeds between the parties thereto.

While preparing agreements it is necessary and important that the intention of the parties should be set forth explicitly so as to leave no room for doubt or future controversy.

The language should be simple and the words used should be definite and precise; the use of loose expression such as “proper”, “reasonable”, should, as far as possible, be avoided.

The provisions of the Indian Contract Act, 1872 about the essential incident and legality of agreements (Sections 2 to 30) should be studied and nothing should be introduced or left out which would make the agreement void. But, if the material terms! of an agreement are clear and specific, omission of certain details which) can be worked out by consent of the parties or in its absence be settled by Court will not invalidate the agreement (Ramchandra v. Chinnubhai, AIR 1945 Mad. 10).

(b) Relevant considerations: In construing the language of a Will, the courts are entitled and bound to bear in mind other matters than merely the words used. They must consider the surrounding circumstances, the position of the testator, his family relationship, the probability that he would use words in a particular sense and many other things which are often summed up in somewhat picturesque figure. The Court is entitled to put itself into the testator’s arm chair. [Venkatanarasimha v. Parthasarthy, 41IA 51, 70(PC); GnambalAmmal v. 7. Rajulyer, AIR 1951 SC 103,106].

Question 22.
Ingredients of a contract of agency that must be specifically incorporated in a contract. (June 2014, 4 marks)
Answer:
Ingredients of an Agency Contract:
The contract of agency is governed by under Sections 182 to 238 of the Contract Act, 1872. The basic features of contract of agency are:

Authority should be given either expressly or impliedly to bind his principal.
While the principal should not be a minor, an agent could be a minor.
Consideration is not necessary for an agency contract.
For the acts of the agent, the principal is liable unless the principal has exceeded his authority.
The authority of an agent extends to the doing of all that is necessary and collateral to the doing of the main act.
The obligations under the contract of agency is not assignable unless:
1. the nature of the business necessitates such assignment.
2. customs of usage of trade in the locality with regard to the business permit such assignment.
3. such assignment is expressly permitted by the contract of agency.

Question 23.
Critically comment on the following:
Formation of e-contracts, being paperless, lies outside the Fowler’s rules of drafting. (Dec 2014, 5 marks)
Answer:
ELECTRONIC CONTRACTS (E-CONTRACTS)
Due to the immoderate advancement of technology E-Commerce has become a part of human daily life. E-Commerce is the selling and purchasing of goods and services using technology.

E-Contracts are basically the contracts analyzed with E-Commerce and other transactions taking place in the digital environment.

E-contract (contract that is not paper based but rather in electronic form)is any kind of contract formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, the interaction of an individual with an electronic agent, such as a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract.

Traditional contract principles and remedies also apply to e-contracts.

This is also known as electronic contract.

Electronic contracts are born out of the need for speed, convenience and efficiency. Imagine a contract that an Indian exporter and an American importer wish to enter into.

One option would be that one party first draws up two copies of the contract, signs them and couriers them to the other, who in turn signs both copies and couriers one copy back.

The other option is that the two parties meet somewhere and sign the contract. In the electronic age, the whole transaction can be completed in seconds, with both parties simply affixing their digital signatures to an electronic copy of the contract. There is no need for delayed couriers and additional travelling costs in such a scenario.

The contracts formed through electronic media are treated as the general contracts and their formation and acceptance are governed as per the Indian Contract Act, 1872.

The Indian Contract Act, 1872 governs the manner in which contracts are made and executed in India. It governs the way in which the provisions in a contract are implemented and codifies the effect of a breach of contractual provisions. Within the framework of the Act, parties are free to contract on any terms they choose. Indian Contract Act consists of limiting factors subject to which contract may be entered into, executed and breach enforced.

Essentials of e-contract
As per the Indian Contract Act, the essentials of a contract are:

An offer or proposal by one party and acceptance of that offer by another party resulting in an agreement consensus-ad-idem.
An intention to create legal relations or an intent to have legal consequences.
The agreement is supported by lawful consideration.
The parties to contract are legally capable of contracting.
Genuine consent between the parties.
The object and consideration of the contract is legal and is not opposed to public policy.
The terms of the contract are certain.
The agreement is capable of being performed i.e., it is not impossible of being performed.

Question 24.
Explain the following:
Distinguishing features of a contract of del credere agency. (Dec 2014, 4 marks)
Answer:
Del Credere Agency:
Del credere agency is an arrangement where an agency is combined with guarantee. In this arrangement, the agent i.e. del credere agent undertakes to guarantee the performance of the contract by the buyer in lien of an extra remuneration. By reason of his charging a del credere commission he assumes responsibility for the solvency and performance of the contract by the vendee and thus indemnifies his principal against loss.

He, therefore, gives an additional security to the seller, but he does not shift the responsibility of payment from the buyer to the seller. A commission del credere is the premium or price given by the principal to the agent for guarantee, which presupposes a guarantee.

He is distinguished from other agents simply in this that he guarantees that those persons to whom he sells perform the contracts which he makes with them.

Question 25.
Explain in brief the essentials of a hypothecation agreement. Draft a specimen agreement on behalf of a firm Excel & Co. to hypothecate goods to execute fixed loan from Rich Bank. (June 2015, 10 marks)
Answer:
HYPOTHECATION AGREEMENT
Hypothecation is a form of transfer of property in goods. Hypothecation agreement is a document by which legal property in goods passes to the person who lends money on them, but the possession does not pass. This form of transfer is not regulated in India by any statute. Neither the Transfer of Property Act, 1882, nor the Indian Contract Act, 1872, nor the Sale of Goods Act, 1930, recognize the non-possessory hypothecation of immovables and the rights and remedies of the parties are regulated by the courts according to the general law of contract.

In hypothecation, there must be an intention of the parties to create a security on the property on which the money has been lent. If that intention can be established, equity gives effect to it. A hypothecation not merely of moveable existing on the premises at the time but also in respect of moveable which might be subsequently acquired and brought there, is valid though it is not governed by the Transfer of Property Act or by the Indian Contract Act, 1872. An oral or written hypothecation is permitted under the law in India.

A Specimen Agreement to Hypothecate Goods to Secure
Fixed Loan from Rich Bank

The Manager,
Rich Bank,
………………………..
……………………….
Sir,
In consideration of your Bank advancing to me/us on loan the sum of ₹ ………………….. I/We hereby agree to hypothecate and hold under lien to the Rich Bank as security for the repayment as per Schedule hereto of the principal amount of the loan and payment of interest on demand at ………………….. % per annum subject to a maximum of ………………….. % per annum above Bank Rate.

The goods so to be held by me/us under lien to the Bank I/We declare to be my/our absolute property, and to be stored in my/our godowns
at ……………………. I/We hereby agree to furnish you at the close of business on the last day of each English calendar month so long as any money remains due in respect of the said loan with a full and correct statement of particulars of all goods so held under lien to the Bank, with the market value thereof respectively on that day.

All goods from time to time held by me/us under lien to the Bank in terms of this agreement shall be kept separate and apart from all other goods in my/our possession, and no moneys shall be borrowed by me/us from any company, firm or person on the security of such goods stored in the same godown in a way that such other goods may be mixed with the goods held under lien to the Bank nor shall I/We do any other act by means of which the Bank’s lien on the goods so held shall be in any way impaired or affected.

It is understood that I/We are at liberty, from time to time in the ordinary course of business, to sell all or any of the goods from time to time held under lien to the Bank under this agreement provided that no such sale shall reduce the value of the goods held under lien below the amount of my/our said debt to the Bank plus the margin of ……………….. per cent. In case of any goods held under lien to the Bank reducing the value of the goods held under this lien to less than the amount of my/our said debt to the Bank plus such margin, the proceeds of such sale, as soon as the same are received, shall be paid into the bank in part satisfaction of the said loan and shall in the meantime be held as specifically appropriated to payment of the amount due by me/us on the security.

I/We empower you or any one from time to time authorised by you on behalf of the Bank to enter the godowns in which the goods held under lien to the bank under this agreement shall be from time to time stored, for the purpose of inspecting and taking an account of the said goods.

I/We further empower you or anyone authorised by you as aforesaid so long as any money advanced by the bank under this agreement remains unpaid, to take possession of any goods from time to time held by me/us under lien to the Bank under this agreement and or any promissory notes or bazaar chits held by me/us in respect of any of the goods which may have been sold in such manner as you may think fit and on so taking possession to Exercise on behalf of the Bank all the rights of a pawnee under the Indian Contract Act and failing payment of the amount under this loan on …………………….. to sell and realise the said goods and promissory notes or bazaar chits.

No notice to me/us of such sale shall be necessary, and I/We hereby agree to waive any such notice. I/We agree to accept the Bank account of such sale signed by the Manager, Accountant or other duly authorised officer of the Bank as sufficient proof of the correctness of the amount realised by the Bank and the charges and expenses incurred in connection with such realisation, and I/We hereby further agree to sign all documents, furnish all information and do all acts and things necessary for the purpose of enabling the Bank to sell any goods or realise any promissory notes or bazaar chits of which you shall so take possession.

I/We undertake to keep all held under lien to the Bank under this agreement, insured against fire to their full value, and to produce and deposit the policies with the Bank any time on demand and to hold all moneys which may become payable under any such policies in trust for the Bank so long as any money shall remain due in respect of my/our said loan. It shall be optional for, but not obligatory on the Bank, to insure the said goods in the Bank’s name or to appropriate floating policies for the time being effected by the Bank towards insurance of the said goods and in either case to debit the said loan with relative premiums.

It is understood that the Bank’s lien on the goods, so held under this agreement shall extend to any other sum or sums of money for which I/we or any other of us either separately or jointly with any other person or persons may be or become indebted or liable to the bank on any account.

Schedule of securities referred
to in the agreement
…………………………….
Schedule of instalments for the
repayment of the loan amount.
……………………………..

Yours faithfully,
For A B C Ltd.
(………………….)
Managing Director,
New Delhi
Dated ………………………

Question 26.
Explain the following: (June 2015)
(a) An arbitration award is required to be registered.
(c) A contract of counter guarantee is different from a contract of fidelity guarantee or performance guarantee. (4 marks each)
Answer:
(a) Arbitral award:
Section 31 of the Act lays down the requirements as to form and contents of an arbitration award. An award must be a speaking order i.e. it must state the reasons, unless the parties have specifically agreed that reasons need not be given or the award is based on agreed terms. The award should state the reasons upon which it is based.

In other words, unless:
(a) the parties have agreed that no reasons are to be given or
(b) the award is an arbitral award on agreed terms under Section 30 of the Act, the award should state the reasons in support of determination of the liability/non-liability.

The legislature has not accepted the ratio of Constitution Bench in the Chokhamal Contractor’s case (AIR 1990 SC 1426), that the award, being in the private law field, need not be a speaking award even where the award relates to the contract of private parties or between person and the Government or public sector undertakings (Tamil Nadu Electricity Board v. Bridge Tunnel Constructions & Others, AIR 1997 SC 1376). Date and Place are to be mentioned in the award in accordance with Section 20 of the Act and the award should be deemed to have been made at that place.

Section 31(1) requires that the award shall be made in writing and shall be signed by the members of the arbitral tribunal. According to Sub-section (5) of Section 31 of the Act, a signed copy of the same is to be delivered to each party.

(b) Counter Guarantee and Fidelity Guarantee : A guarantee, guaranteeing an employer against the misconduct of an employee or to answer for the debt or default of another, is called a “fidelity guarantee”.

Question 27.
In the light of judicial pronouncements, discuss the following:
In case of repugnancy in a will, last words shall prevail. (June 2015, 4 marks)
Answer:
If the several parts of the Will are absolutely irreconcilable, the part that is later has to prevail. [Section 88, Indian Succession Act, 1925; Somasundera Mudaliar V. Ganga Bissen Soni, 28 Mad 386]. In case of repugnancy, the last word in the Will shall prevail. [CIT V. Indian Sugar Mills Association, (1974) 97ITR 486 SC].

Question 28.
What are e-contracts? Discuss important points with regard to drafting of e-contract. (June 2015, 8 marks)
Answer:
ELECTRONIC CONTRACTS (E-CONTRACTS)
Due to the immoderate advancement of technology E-Commerce has become a part of human daily life. E-Commerce is the selling and purchasing of goods and services using technology. E-Contracts are basically the contracts analyzed with E-Commerce and other transactions taking place in the digital environment.

E-Contract (contract that is not paper based but rathei in electronic form) is any kind of contract formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, the interaction of an individual with an electronic agent, such as a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract. Traditional contract principles and remedies also apply to e-contracts. This is also known as electronic contract.

ESSENTIALS OF E-CONTRACT:
As per the Indian Contract Act, the essentials of a contract are:

An offer or proposal by one party and acceptance of that offer by another party resulting in an agreement consensus-ad-idem.
An intention to create legal relations or an intent to have legal consequences.
The agreement is supported by lawful consideration.
The parties to contract are legally capable of contracting.
Genuine consent between the parties.
The object and consideration of the contract is legal and is not opposed to public policy.
The terms of the contract are certain.
The agreement is cajDable of being performed i.e., it is not impossible of being performed.

Question 29.
Comment on the following:
Registration of a will is not mandatory. (Dec 2015, 4 marks)
Answer:
Registration of Will is not mandatory. It is optional. (Section 18(c) Registration Act,1908) However, a registered Will has certain advantages. Any testator may, either personally or by duly authorized agent deposit with any Registrar his Will in a sealed cover super scribed with the name of the testator and that of his agent (if any) and with a statement of the nature of the document as per Section 42 of Registration Act, 1908. The testator, or after his death any person claiming as executor or otherwise under a Will, may present it to any Registrar or Sub- Registrar for registration under section 40 of the Registration Act, 1908.

Question 30.
Explain electronic data interchange (EDI). (Dec 2015, 4 marks)
Answer:
Electronic Data Interchange (EDI) is an electronic communication method that provides standards for exchanging data via any electronic means. By adhering to the same standard, two different companies or organizations, even in two different countries, can electronically exchange documents (such as purchase orders, invoices, shipping notices, and many others, EDI implies a sequence of messages between two parties, either of whom may serve as originator or recipient.

The formatted data representing the documents may be transmitted from originator to recipient via telecommunications or physically transported on electronic storage media. It distinguishes mere electronic communication or data exchange, specifying that in EDI, the usual processing of received messages is by computer only.

Human intervention in the processing of a received message is typically intended only for error conditions, for quality review, and for special situations.

EDI can be formally defined as the transfer of structured data, by agreed message standards, from one computer system to another without human intervention.

Question 31.
Business and knowledge process outsourcing has emerged as a key growth driver in the Indian services sector. Discuss the factors to be considered in drafting of an outsourcing agreement. (Dec 2015, 8 marks)
Answer:
Before signing an outsourcing agreement, the following factors must be properly addressed:

Duties and obligations of Outsourcer
Duties and obligations of service provider
Security and Confidentiality
Legal compliance
Fees and Payment terms
Proprietary rights
Auditing rights
Applicable law to outsourcing agreement
Term of the Agreement
Events of Defaults and Addressing
Dispute Resolution Mechanism
Time limits
Location of Arbitration
Number of Arbitrators
Interim measures/Provisional Remedies
Privacy Agreement
Non-compete Agreement
Confidentiality Agreement
Rules Applicable
Appeal & Enforcement
Be aware of local peculiarities
Survival terms after the termination of the outsourcing agreement.

Question 32.
Comment on the following :
A contract of guarantee is a contract to perform the promise. (June 2016, 5 marks)
Answer:
A “contract of guarantee” is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the “surety”; the person in respect of whose default the guarantee is given is called the “principle debtor”; and the person to whom the guarantee is given is called the “creditor”. A guarantee may tje either oral or written. (Section 126 of the Indian Contract Act, 1872).

The guarantee contract is an undertaking to make good the creditors in case the principle debtor does not fulfil his promise. Hence, the creditor is assured that the promise will be performed by the guarantor in case the principle debtor fails.

Question 33.
In the light of judicial pronouncements, discuss the following: (b) It is to ascertain the intentions of the testator who constructed a will. (June 2016, 4 marks)
Answer:
Like any other document, a will is subject to interpretation. The Supreme Court in GnambalAmmal v. T. Raju Iyer held that the cardinal maxim to be observed in construing a will is to endeavour to ascertain the intentions of the testator. This intention has to be primarily gathered from the document which is to be read as a whole without indulging in any conjecture or speculation as to what the testator would have done, if he had been better informed or better advised.

Question 34.
In the light of judicial pronouncements, discuss the following:
Revocation of gift. (June 2016, 4 marks)
Answer:
Revocation of gift:
Section 126 of Transfer of Property Act, 1882 prescribes the circumstances when a gift may be suspended or revoked. As per Section 126, the donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked, but a gift which the parties agree shall be revocable wholly or in part at the mere will of the donor is void, wholly or in part as the case may be. A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract it might be rescinded.

Save as aforesaid, a gift cannot be revoked. Gift in India are regulated by personal law, usages and customs. Under Hindu Law a gift once completed is binding upon the donor and it cannot be revoked by him unless it was obtained by fraud or undue influence [Ganga Baksh v. Jagat Bahadure (1896)23 Cal – 15\. But the rules of Muslim Law are different. Section 126 of T.P. Act, 1882 for revocation of gift cannot be applied to Muslims.

A Muslim can revoke a gift even after delivery of possession except in following cases (1) when the gift is made by a husband to his wife or by a wife to her husband; (2) when the donee is related to the donor within the prohibited degrees; (3) when the gift is Sadaka (made to a charity or for a religious cause); (4) when the donee is dead; (5) when the thing given has passed out of the donees’ possession by sale, gift or otherwise; (6) when the thing given is lost or destroyed; (7) when the thing given has increased in value; (8) when the thing given is so changed that it cannot be identified; (9) when the donor has received some thing in exchange for the gift.

Question 35.
Business contracts these days specify the rights, liabilities and activities of the parties in detail. Still in the event of breach of the contractual obligations, irreparable intangible damages like loss of reputation and market do occur. Advise the remedies and redressal action, an aggrieved party to the contract can take under the civil law in such an event if the contract could still be saved. Cite legal provisions, if any. (June 2016, 8 marks)
Answer:
The aggrieved party to the contract may seek the following remedies and redressal actions:
(a) Injunction
(b) Suit for specific performance

Injunction:
An injunction is a specific order of the Court forbidding the commission of a wrong threatened or the discontinuance of a wrongful course of action already begun.

Injunction may be either temporary or permanent.

Permanent injunction restrains a party for ever doing the specified act and the same can be granted only on merits of the case at the conclusion of the trial after hearing both parties to the suit. It is governed by Section 38 to 42 of Specific Relief Act, 1963.

A temporary injunction restrains a party from doing the specified act and can be granted until the final disposal of the suit. It is regulated by the provisions of Order 39 of the Code of Civil Procedure and it may be granted at any stage of the suit.

The power to grant temporary injunction is at the discretion of the Court. The discretion however should be exercised reasonably, judiciously and on some legal principles.

Suit for Specific performance:
Specific performance is an order of the Court which requires a party to perform a specific act, usually what is stated in the contract. It is an equitable remedy commonly used in the form of injunctive relief concerning confidential information or real property.

Specific performance is granted when damages are npt an adequate remedy and in some specific cases such as sale of land. Such orders are discretionary as with all equitable remedies, so the availability of this remedy will depend on whether it is appropriate in the circumstances of the case.

The Supreme Court in Babulal v. Hazari Lai and others has held that no special form of decree on a suit for specific performance is supplied by CPC. Chapter 11 of Special Relief Act, 1963 deals with the various circumstances under which a contract may be enforced specifically and when it cannot be allowed. When a contract is to be specifically enforced, it means simply that when the parties do not agree to perform the contract mutually, the intervention of Court is required.

Question 36.
‘Outsourcing’ is the contracting out of a company’s non-core and non-revenue generating activities to specialists. Before signing an outsourcing agreement, what are the factors that must be addressed? (June 2016, 8 marks)
Answer:
Outsourcing Agreements: Outsourcing is the contracting out of a company’s non-core, non-revenue producing activities to specialists. It differs from contracting in that outsourcing is a strategic management tool that involves the restructuring of an organization around what it does best – its core competencies.

Two common types of outsourcing are Information Technology (IT) outsourcing and Business Process Outsourcing (BPO). BPO includes outsourcing related to accounting, human resources, benefits, payroll, and finance functions and activities. Knowledge Process Outsourcing (KPO) includes outsourcing related to legal, paralegal, and other highly skilled activities.

A good outsourcing agreement is one which provides a comprehensive road map of the duties and obligations of both the parties – outsourcer and service provider. It minimizes complications when a dispute arises. However, many a times people neglect to pay attention while drafting an outsourcing agreement. Before finalizing an outsourcing agreement, the terms should be thoroughly discussed and negotiated to avoid any misunderstanding at a later stage. It is advisable to consult a lawyer before finalizing any outsourcing agreement.

Before signing an outsourcing agreement, the following factors must be properly addressed:

Duties and obligations of Outsourcer
Duties and obligations of service provider
Security and confidentiality
Legal compliance
Fees and payment terms
Proprietary rights
Auditing rights
Applicable law to outsourcing agreement
Term of the Agreement
Events of Defaults and Addressing
Dispute Resolution Mechanism
Time limits
Location of Arbitration
Number of Arbitrators
Interim measures/Provisional Remedies
Privacy Agreement
Non-compete Agreement
Confidentiality Agreement
Rules Applicable
Appeal and Enforcement
Be aware of local peculiarities
Survival terms after the termination of the outsourcing agreement.

Question 37.
Comment on the following statement: (Dec 2016)
(a) A click-wrap agreement lacking bargaining power is not an enforceable contract in traditional sense. (5 marks)
(b) Certain basic principles are required to be followed in the construction of a will. (5 marks)
Answer:
(a) These are the agreements which we generally come across while surfing internet such as “I AGREE” to the terms or “I DISAGREE” to the above conditions. A click-wrap agreement is mostly found as part of the installation process of software packages. It is also called a “click through” agreement or click-wrap license.

Click-wrap agreements can be of the following types:
1. Icon Clicking where the user must click on an “OK” or “I agree” button on a dialog box or pop-up window. A user indicates rejection by clicking “Cancel” or closing the window. Upon rejection, the user can no longer use or purchase the product or service. A click wrap contract is a “take-it-or-leave-it” type of contract that lacks bargaining power.

2. Click-wrap agreements are vafid and enforceable contracts as far as offer and acceptance is concerned. Click-wrap agreements are contracts formed entirely over the Internet. Contracts are governed by the Indian Contract Act, 1872, but the e-contracts are governed under the Information Technology Act, 2000.

(b) The basic principles to be followed in the construction of a will are:
(i) Cardinal maxim: The cardinal maxim to be observed in construing a Will is to endeavour to ascertain the intentions of the testator. This intention has to be primarily gathered from the document which is to be read as a whole without indulging in any conjecture or speculation as to what the testator would have done, if he had been better informed or better advised. [Gnambal Ammal v. T. Raju Iyer, AIR 1951 SC 103, 105].

(ii) Relevant considerations: In construing the language of a Will, the courts are entitled and bound to bear in mind other matters than merely the words used. They must consider the surrounding circumstances, the position of the testator, his family relationship, the probability that he would use words in a particular sense and many other things which are often summed up in somewhat picturesque figure. [Venkatanarasimha v. Parthasarthy, 41IA 51, 70 (PC).

(iii) Avoidance of intestacy: If two constructions are reasonably possible and one of them avoids intestacy while the other involves it, the court would certainly be justified in preferring that construction which avoids intestacy. It is settled law that words in a Will must be construed in their ordinary grammatical sense unless it is shown that ’ a clear intention to use them in a different sense exists and is so proved. [Guruswami Pillai v. Sivakami Ammal, AIR 1962 Mad 2361.

(iv) Effect should be given to every disposition: It is one of the cardinal principles of construction of Will that to the extent that it is „ legally possible, effect should be given to every disposition contained in the Will unless the law prevents effect being given to it. The intention of the testator should be gathered by giving a harmonious interpretation to the various terms of the Will as a whole. [Rampali v. Chando, AIR 1966 All 584, 586].

(v) Later part or last words to prevail in case parts irreconcilable or there is repugnancy. If the several parts of the Will are absolutely irreconcilable, the part that is later has to prevail.

Question 38.
In the light of judicial pronouncements, discuss the following:
A will and codicil are one and the same. (Dec 2016 4 marks)
Answer:
‘Will’ means the legal declaration of the intention of a testator with respect to his property, which he desires to be carried into effect after his death. A Will is, therefore, the legal declaration of a man’s intention which he wills to be performed after his death or an instrument by which a person makes a disposition of his property to take effect after his death.

Whereas, ‘Codicil’ means an instrument made in relation to Will and explaining, altering or adding to its dispositions and is deemed to form part of the Will – Section 2(d) of Indian Succession Act, 1925. ‘Will’ as per General Clause Act, 1897 shall include a Codicil and every writing making a voluntary posthumous disposition of property – Section 3(64).

Question 39.
Comment on the following with reference to ratio in leading case:
Pre-requisites of arbitration. (Dec 2016, 4 marks)
Answer:
Every arbitration must have the following three pre-requisites:

a dispute between parties to an agreement, requiring a settlement;
its submission for a settlement to a third person; and
a decision by such third person according to his own judgement based on the facts and circumstances of the dispute, which is binding on both the parties.

Question 40.
Subrogation of Surety to the Rights of creditor on payment. (June 2017, 4 marks)
Answer:
When a surety makes a payment to a creditor on behalf of the principal debtor in case of a default, he acquires the rights of a creditor against the principal debtor. He can recover the entire amount that he has paid to the creditor. This is called the right of subrogation.

Section 140 of the Indian Contract Act, 1872 invests a surety with all the rights which the creditor has against the principal debtor, where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety has made the payment or performed all that he is liable for.

Question 41.
Gift can be made either orally or through Gift deed. Is there any requirement to get it stamped and registered? (June 2017, 4 marks)
Answer:
The gift deed should be drafted as a deed of transfer with recitals if necessary. There is no consideration involved in gift as such no mention is required to be made of the same in the gift deed. However, the words “natural love and affection” is generally expressed in all cases of gift to relations, and “consideration of esteem and regard” is expressed when the gift is in favour of same person for whom the donor has regard e.g. when the donee is his religious preceptor. But for a Company these intra-personal characteristic may be necessary. A Company may make gift to honour a person for his outstanding achievements in social life if so authorised under its memorandum and articles.

The value of the property gifted must be set forth in the deed of gift. Stamp Duty is payable on gift deed as on the conveyance as per amount of value of the property as mentioned in the deed or as per market value of such property whichever is greater as per Article 23 of the Indian Stamp Act, 1899. If the value of the property is intentionally omitted or under-valued with a view to defraud the revenue, prosecution may be invited under Section 64 of Indian Stamp Act. Further, penalty provisions under Gift-tax Act may also be attracted.

Gift deed of immovable property is compulsorily registrable as per Section 123 of the Transfer of Property Act and Section 17(i)(a) of the Registration Act, 1908, whatever may be the values.

Question 42.
An award given by the Arbitrator is not always final and binding upon the parties. (June 2017, 4 marks)
Answer:
Arbitration is a means devised to quick and economical settlement of a dispute between two contracting parties, who also agree as part of the main agreement to refer dispute or difference arising out of or touching upon the terms and conditions of the agreement to a third person to give his judgement, which shall be binding on both the parties. Where the decision of a person is binding on only one of the parties and not on all the parties to the dispute, it cannot be said that the function, which the person giving the decision is exercising, is arbitral in character.

Normally, the decision of the arbitrator is binding upon the parties. However, if the same is not acceptable to either of the parties, then an appeal can be made under section 34 of the Arbitration and Conciliation Act, 1996.

Question 43.
Draft a petition for grant of probate of a will. (June 2017, 8 marks)
Answer:
Petition for grant of probate of a will
(Under Sec. 276 of the Indian Succession Act, 1925)
In the Court of the District Judge/District Delegate at ……………………………..

Act 39 of 1925 Case (Or. Misc. Judicial Case) No …………………………….. of 20 ………………..
A.B. son of C.D.
(State here description and address)
…………………………….. Petitioner.

In the matter of grant of a probate of the will of E.F., deceased, under Sec. 276 of the Indian Succession Act.
The above-named petitioner states as follows:
1. That E.F., since deceased of ……………. P.S …………… Dist ………… died at his residence at …………. on ………… (date of death) and the writing annexed, in sealed cover, is his last will, duly executed by the deceased on ………………..

2. That the petitioner was named as the executor in the said will.

3. That the amount of assets which is likely to come to the petitioner’s hand is estimated at ₹ …………………. as described in Schedule ‘A’ below and the amount of debts are shown in Schedule ‘B’ below.

4. That the said deceased left behind the following relations, besides the petitioner:
(i) G ………………… Son of …………………
(State residence) Brother
(ii) H ………………… widow of
(State residence) Widow of the deceased
(iii) M ………………… Daughter of
(State residence) Daughter

5. That at the time of his death the deceased had his fixed abode at ……………… (or the deceased had his immovable properties at village—PS. — Dist.-) within the jurisdiction of this Court.
6. That to the best of the petitioner’s belief no application has been made to any other court for a probate of the said will.
7. That the petitioner has paid off Estate Duty on the estate of E.F. — deceased.
8. The petitioner, therefore, prays that the court be pleased to grant to the petitioner probate of the said will of the deceased.

Verification
I, (A.B.), the petitioner in the above petition, declare that statements made in paras 1 to 7 herein above are true to my knowledge and belief and I sign this verification this the ……………… day of ……………. 20 …………….. at the declare that I was present and saw the said testator affixing his signature in the said will. (See Sec. 281 of the Indian Succession Act).

A.B.
I, Sri, ……………….. one of the witnesses to the last will of E.F. deceased, declare that 1 was present and saw the said testator affixing his signature in the said will. (See Sec. 281 of the Indian Succession Act).

Schedule ‘A’
(State here assets likely to come to the hand of the executor).
Schedule ‘B’
(State here liabilities, debts, if any).

Question 44.
Comment on the following statements: (Dec 2017)
(a) How is a del credere agent different from other types of agents?
(b) Rules of Interpretation. (5 marks each)
Answer:
(a) Del Credere Agency:
There is a special type of agency, which combines agency with guarantee. This is known as del credere agency. A del credere agent is one who, for an extra remuneration undertakes the liability to guarantee the due performance of the contract by the buyer. By reason of his charging a del credere commission he assumes responsibility for the solvency and performance of the contract by the vendee and thus indemnifies his principal against loss. He, therefore, gives an additional security to the seller, but he does not shift the responsibility of payment from the buyer to the seller. A commission del credere is the premium or price given by the principal to the agent for guarantee, which presupposes a guarantee.

A del credere agent like any other agent, is to sell according to the instructions of his principal, to make such contracts as he is authorised to make for his principal and be bound, as soon as he receives the money, to hand it over to the principal. He is distinguished from other agents simply in this that he guarantees that those persons to whom he sells perform the contracts which he makes with them.

(b) Formal Agreements: The following rules of interpretation may be applied:
(i) Under Section 91 of the Evidence Act provides that a deed constitute the primary evidence of the terms of a Contract, or of a grant or of any other disposition of property.

(ii) In case of uncertainty, the rule embodied in provisions 2 and 6 of Section 92 of the Evidence Act can be invoked for construing a deed –

(iii) The cardinal rule is that clear and unambiguous words prevail over any hypothetical consideration.

(iv) Sometimes a contract is completed in two parts:-
(a) An executory contract is executed
(b) An executed contract
(v) The Court must interpret the words in their popular, natural and ordinary sense, subject to certain exceptions as,
(a) Where the contract affords an interpretation different from the ordinary meaning of the words; or
(b) Where the conventional meanings are not the same with their legal sense.

(vi) All mercantile documents should receive a liberal construction.

(vii) If certain words employed in business, or in a particular locality have been used in particular sense, they must prima facie be construed in technical sense.

(viii) The ordinary grammatical interpretation is not to be followed, if it is repugnant to the general context.

(ix) If the main clause is clear and the contingency mentioned in the proviso does not arise, the proviso is not attracted at all and its language should not be referred to for construing the main clause in a manner contradictory to its import.
(x) As a general rule of construction of documents, the recitals are not looked into, if the terms of the deed are otherwise clear. If in a deed the operative part is clear, or the intention of the parties is clearly made out, whether consistent which the recitals or not, the recitals have to be disregarded.

(xi) Sometimes a standard form is used, particularly in contracts with government departments on big corporations. In these standard printed forms, words not applicable are deleted according to the requirements of individual transactions.

Question 45.
Define Gift. Discuss procedure for making a gift. Draft a specimen deed of Gift for Love and affection. (Dec 2017, 8 marks)
Answer:
Gift has been defined under Section 122 of the Transfer of Property Act, 1882. Section 122 states that ‘Gift’ is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Such acceptance must be made during the life time of the donor and while he is still capable of giving. If the donee dies before acceptance, this gift is void.

For the purpose of making gift of immovable property, the transfer must be affected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses.

Deed of Gift – How Made:
The gift deed should be drafted as a deed of transfer with recitals if necessary. There is no consideration involved in gift as such no mention is required to be made of the same in the gift deed. However, the words “natural love and affection” is generally expressed in all cases of gift to relations, and “consideration of esteem and regard” is expressed when the gift is in favour of same person for whom the donor has regard e.g. when the donee is his religious preceptor. But for a Company these rntra-personal characteristic may be necessary. A Company may make gift to honour a person for his outstanding achievements in social life if so authorised under its memorandum and articles.

Stamp Duty and Registration:
The value of the property gifted must be set forth in the deed of gift. Stamp Duty is payable on gift deed as on the conveyance as per amount of value of the property as mentioned in the deed or as per market value of such property whichever is greater as per Article 23 of the Indian Stamp Act, 1899. If the value of the property is intentionally omitted or under-valued with a view to defraud the revenue, prosecution may be invited under Section 64 of Indian Stamp Act (Muhamad Muzaffar Ali ILR 44 Allahabad 339 FB). Further, penalty provisions under Gift-tax Act may also be attracted.

Gift deed of immovable property is compulsorily registrable as per Section 123 of the Transfer of Property Act and Section 17(i)(a) of the Registration Act, 1908, whatever may be the values.

Specimen Forms of Gift Deeds:
Having been acquainted with the relevant provisions of the law concerning “gift” the following specimen forms of gift deed are given below which can be used in different situations by making suitable modifications as per the needs:

Deed of gift for love and affection.
Deed of gift of property for particular purpose.
Deed of gift of land in trust to charity.
Grant of land for building a temple.
Memorandum of gift of movables.
Gift of business goodwill.
Deed of gift of immovable property in favour of one of the sons of the donor.
Memorandum of a completed verbal gift in favour of the sons of the donor.

Deed of Gift for Love and Affection
THIS GIFT is made on the ………………….. day of …………………… BETWEEN AB, etc. (called “the donor”) AND CD, etc. (called “the donee”). WHEREAS the donor is owner of the property described in the Schedule and out of his paternal affection for his daughter, the donee, is desirous of making a gift of the said property to the donee at the time of her marriage.

Now this deed witnesses as follows:
1. in consideration of the natural love and affection of the donor for the donee, the donor transfers to the donee free from encumbrances ALL the property described in the Schedule TO HOLD the same to the donee absolutely for ever.
2. The donee accepts the transfers.
IN WITNESS WHEREOF, etc.,

The Schedule above referred to

Signed, sealed and delivered

AB
CD

Question 46.
Comment on the following :
A will does not require to be registered. (June 2018, 5 marks)
Answer:
A Will does not require to be registered
A Will is a most solemn document. It also a sacred document as a dead person entrusts to a living person the carrying out of his wishes and desires. A Will is valid in the eyes of law even if it is not registered.

A handwritten Will is also acceptable. According to Section 18(c) of the Registration Act, 1908, registration of Will is not mandatory. It is optional. However a registered Will has certain advantages. Any testator may, either personally or by duly authorized agent deposit with any Registrar his Will in a sealed cover super scribed with the name of the testator and that of his agent (if any) and with a statement of the nature of the document as per Section 42 of Registration Act, 1908. The testator, or after his death any person claiming as executor or otherwise under a Will, may present it to any Registrar or Sub Registrar for registration under Section 40 of the Registration Act, 1908.

Question 48.
Explain the following : (June 2018)
(i) Utility of arbitration (4 marks)
(ii) Electronic or e-contracts (4 marks)
(iiii) Building contracts (4 marks)
Answer:
(i) Utility of Arbitration
Civil litigation takes years and years to settle simple disputes. Arbitration is a means devised to quick and economical settlement of a dispute between two contracting parties, who also agree as part of the main agreement to refer dispute or difference arising out of or touching upon the terms and conditions of the agreement to a third person to give his judgement, which shall be binding on both the parties. Thus, arbitration is a method to ensure settlement of disputes and helps in saving time and money.

(ii) Electronic or e – contracts
Electronic or e – contract is the result of advances made in science and technology. It refers to contracts that are not proper or parchment based but in the digital or electronic format. It is a contract formed in the course of e – commerce by the interaction of two or more parties using electronic means, including but not limited to email, interaction with electronic agents such as computer programmes and interest based agreements.

Electronic Contracts are also covered by the provisions of the Contract Act, 1872, and hence the concepts of offer and acceptance, free consent and consideration will be applicable. In addition, e – contracts are also governed by the provisions of the Information Technology Act, 2000. The conventional law relating to contracts is not sufficient to address all the issues, The Information Technology Act solves some of the peculiar issues that arise in the formation and authentication of electronic contracts.

(iii) Building Contracts
Building contracts, being legal documents, have to be drawn in accordance with the provisions of the Indian Contract Act, 1872. Such an agreement or contract must be drawn in accordance with the provisions of the Act. All the essential ingredients of a contract, such as, a proposal, its acceptance, its due communication to the proposer, lawful consideration, lawful purpose and competence of parties to the contract etc. must be duly satisfied and ensured while drafting such contracts.

It is essential to asertain not only the legal position or condition of each of the parties to the contract but also that each person signing the document has necessary capacity to contract. Amongst others, the building contract must clearly describe the full names, addresses and capacities of each of the contracting parties, property, comprise construction details, time lines for completion, clauses for default, payment schedules, responsibility for obtaining municipal permits and so on.

Question 49.
Comment on the following Statements :
Terms and Conditions in the Agreement to Sell/Purchase. (Dec 2018, 5 marks)
Answer:
Terms and conditions in the Agreement to Sell/Purchase:
(a) The seller has a marketable title in the property agreed to be sold/ Purchased and that the seller has produced the title deeds relating to the property to the buyer for his inspection or in any other manner, must be specifically stipulated between the parties to the agreement.

(b) If the property agreed to be sold is a part of a larger property, an agreement as to retention of a specific or all the title deeds to the property by a party should be arrived at and include in the agreement to sell/purchase.

(c) If the property is subject to any prior charge or encumbrance, the parties must agree that the sale is to be subject to such encumbrance or price payable under the agreement including the sum due under the encumbrance and is required to be paid to the charge holder at the time of registration or thereafter.

(d) The manner of payment of the price or the balance thereof, if some earnest money or deposit has been paid, should also be stipulated in the agreement. It should also be clearly stated whether the seller or the purchaser shall be liable to pay rates, rents, taxes or other imposts for the period commencing from the date of performance of the agreement to seil/purchase till the execution of the conveyance deed.

(e) The parties should agree as to the point of time when possession of the property should be handed over by the seller to the buyer, if the seller is in possession or how the atonement by the tenant (s), if the possession is to be effected.

(f) The parties should also agree as to who shall bear the cost and expense of execution and registration of the sale deed and if both the parties have to bear the same, in what precise proportions they shall bear.

(g) If any broker is involved in the transaction, the agreement should clearly spell out if any brokerage is payable and by whom and at what rate, and at what point of time.

Question 50.
Draft a Specimen Agreement on behalf of a firm M/s ABC to hypothecate goods to secure fixed Loan from Axis Bank. Assume data. (Dec 2018, 8 marks)
Answer:
Specimen Agreement to Hypothecate Goods to Secure Fixed Loan

The Branch Manager,
Axis Bank,
Sir,

In consideration of your Bank advancing to me/us on loan the sum of ₹ ……………………. I/We hereby agree to hypothecate and hold under lien to the Banks as security for the repayment as per Schedule hereto of the principal amount of the loan and payment of interest on demand at ……………… % per annum subject to a maximum of ………………….. % per annum above Bank Rate.

The goods so to be held by me/us under lien to the Bank I/ We declare to be my/our absolute property, and to bestored in my/our godowns at ………………… I/We hereby agree to furnish you at the close of business on the last day of each English calendar month so long as any money remains due in respect of the said loan with a full and true statement of particulars of all goods so held under lien to the Bank, with the market value thereof respectively on that day.

It is understood that I/We are at liberty, from time to time in the ordinary course of business, to sell all or any of the goods from time to time held under lien to the Bank under this agreement provided that no such sale shall reduce the value of the goods held under lien below the amount of my/our said debt to the Bank plus the margin of ……………… per cent. In case of any goods held under lien to the Bank reducing the value of the goods held under this lien to less than the amount of my/pur said debt to the Bank plus such margin, the proceeds of such sale, as soon as the same are received, shall be paid into the bank in part satisfaction of the said loan and shall in the meantime be held as specif ically appropriated to payment of the amount due by me/us on the security.

I/We further empower you or anyone authorised by you as aforesaid so long as any money advanced by the bank under this agreement remains unpaid, to take possession of any goods from time to time held by me/us under lien to the Bank under this agreement and or any promissory notes or bazaar chits held by me/us in respect of any of the goods which may have been sold in such manner as you may think fit and on so taking possession to exercise on behalf of the Bank all the rights of a pawnee under the Indian Contract Act, and failing payment of the amount under this loan on ………………. to sell and realize the said goods and promissory notes or bazaar chits. No notice to me/us of such sale shall be necessary, and I/We hereby agree to waive any such notice.

I/We agree to accept the Bank account of such sale signed by the Manager, Accountant or other duly authorised officer of the Bank as sufficient proof of the correctness of the amount realised by the Bank and the charges and expenses incurred in connection with such realisation, and I/We hereby further agree to sign all documents, furnish all information and do all acts and things obligatory for the purpose of enabling the Bank to sell any goods or realise any promissory notes or bazaar chits of which you shall so take possession.

It shall be optional for, but not obligatory on the Bank, to insure the said goods in the Bank’s name or to appropriate floating policies for the time being effected by the Bank towards insurance of the said goods and in either case to debit the said loan with relative premiums.

It is understood that the Bank’s lien on the goods, so held under this agreement shall extend to any other sum or sums of money for which I/We or any other of us either separately or jointly with any other person or persons may be or become indebted or liable to the bank on any account.

Schedule of securities referred to in the agreement.
……………………………
Schedule of instalments for the repayment of the loan amount.

Your faithfully,
For ABC Ltd.
(…………………)
Managing Director,
New Delhi
Dated ……………………..

Question 51.
Define ‘Will’ and explain its essential characteristics. Is there any requirement to get it stamped and registered? (Dec 2018, 6 marks)
Answer:
As per Section 2(h) of Indian Succession Act, 1925, “Will” means the legal declaration of the intention of a testator with respect to his property, which he desires to be carried into effect after his death.

Essential characteristics of Will are:

The document must be in accordance with the requirements laid down under Section 63 of the Indian Succession Act, 1925, i.e. executed by a person competent to make Will and attested as required under the Act.
The declaration should relate to the properties of the testator, which he wishes to bequeath.
The declaration must be to the effect that it operates after the death of Testator.
It is revocable during the life time of the testator.
It is of an ambulatory nature which can be modified or altered at any time by the testator.
Wills should be made in writing.

NOTE:
A Will does not require any stamp duty. Registration of Will is not compulsory. It is optional under Section 18 of the Registration Act, 1908. However, a registered Will has certain advantages.

Question 52.
Explain the following:
Revocation of Gift. (June 2019, 4 marks)
Answer:
Revocation of Gift:
Section 126 of Transfer of Property Act, 1882 prescribes the circumstances when a gift may be suspended or revoked. As per Section 126, the donor and donee may agree that on the happening of any specified event which does not depend on the will of the donor a gift shall be suspended or revoked, but a gift which the parties agree shall be revocable wholly or in part at the mere will of the donor is void, wholly or in part as the case may be.

A gift may also be revoked in any of the cases (save want or failure of consideration) in which, if it were a contract it might be rescinded. Save as aforesaid a gift can not be revoked. Gift in India is regulated by personal law, usages and customs. Under Hindu Law a gift once completed is binding upon the donor and it cannot be revoked by him unless the gift property was obtained by fraud or undue influence.

Example:
A gives a field to B, reserving to himself, with B‘s assent, the right to take back the field in case B and his descendants die before A. B dies without descendants in A’s lifetime. A may take back the field.

Question 53.
In order to solve certain disputes among the partners, arbitrator has been appointed, but there is no arbitration clause in the partnership deed, except only communication through electronic means among the partners relating appointment of arbitrator. One partner challenges the appointment of arbitrator. Decide. (Dec 2019, 4 marks)
Answer:
The ‘arbitration agreement’ under the Arbitration and Conciliation Act, 1996 means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of defined legal relationship whether contractual or not. It may be in the form of an arbitration clause in a contract or in the form of a separate agreement. It has to be in writing.

It is in writing if it is contained in a document signed by the parties, or in an exchange of letters, telex telegrams or other means of telecommunication “including communication through electronic means” which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of agreement is alleged by one party and not denied by the other.

Thus the appointment of arbitrator in the question cannot be challenged by the partner.

Question 54.
Draft an agreement in favour of a Bank to hypothecate goods to secure a working capital loan by the company. (Dec 2020, 4 marks)

Question 55.
Draft an arbitration clause in a building construction agreement with assumed facts. (Dec 2020, 4 marks)
Answer:
Arbitration Clause
“It is further agreed between the parties every difference or dispute which may hereafter arise between the parties hereto or their respective representatives in relation to this agreement or arising there out, whether as to the constructions or operations thereof, or the respective rights and liabilities there under or any thing done hereunder or otherwise, shall be referred to a sole arbitrator in accordance with, and subject to, the provisions of the Arbitration and Conciliation Act, 1996. His award shall be final, accepted and binding on both the parties.”

Question 56.
What are building contracts and collaboration agreements. Is there a difference between them? (Dec 2020, 6 marks)
Answer:
Building Contracts: Building contracts, being legal documents, have to be drawn in accordance with the provisions of the Indian Contract Act.

All the essential ingredients of a contract, such as, a proposal, its acceptance, its due communication to the proposer, lawful consideration, lawful purpose and competence of parties to the contract, etc., must be duly satisfied and ensured while drafting such contracts.

It is essential to ascertain not only the legal position or condition of each of the parties to the contract, e.g. an individual, a firm or partnership, a company, or as the case may be, but also that each person signing the document has capacity to contract.

The contract should clearly state the full names, addresses and capacities of each of the contracting parties and, in the case of firm, partnership or company, the name or complete style of the firm, partnership or company, its legal status, the date and place of its incorporation, registered office, and so on.

Collaboration Agreements: When two parties join hands for exchange of technical know-how, technical designs and drawings; training of technical personnel of one of the parties in the manufacturing and/or research and development divisions of the other party; continuous provision of technical, administrative and/or managerial services, they are said to be collaborating in a desired venture.

The word “COLLABORATION” has, however, acquired a specific meaning, which refers to co-operation between a party within India and a party abroad.

A large number of Indian industrialists have already entered into long and short-term collaboration arrangements with foreign companies, firms etc.

Question 57.
Illustrate, whether stamp duty and registration of a gift deed is compulsory ? (Aug 2021, 4 marks)
Answer:
Yes, the value of the property gifted must be set forth in the deed of gift. Stamp Duty is payable on gift deed as on the conveyance as per amount of value of the property as mentioned in the deed or as per market value of such property whichever iq greater as per Article 23 of the Indian Stamp Act, 1899. If the value of the property is intentionally omitted or under-valued with a view to defraud the revenue, prosecution may be invited under Section 64 of Indian Stamp Act (Muhamad Muzaffar Ali ILR 44 Allahabad 339 FB). Further, penalty provisions under Gift-tax Act may also be attracted.

Gift deed of immovable property is compulsorily registrable as per Section 123 of the Transfer of Property Act and Section 17(i)(a) of the Registration Act, 1908, whatever may be the values.

Question 58.
“An arbitrator is not bound by the strict rules of evidence of court of law”. Comment and state the methods of arbitration in the light of this statement. (Aug 2021, 4 marks)
Answer:
The parties to the dispute will enter into an agreement to refer the dispute to arbitration and will agree on the terms of reference, that is, to state clearly and precisely the matter the arbitrator is required to decide. While deciding the matters, he follows the practice of presentation and conduct of a case in a court of law. Most of the evidence is in writing, party may be cross-examined on the written evidence of both the parties, and then the arbitrator makes his award in writing within the terms of reference. It is for the arbitral tribunal to lay down its own procedure during the arbitration proceedings. The power of the arbitral tribunal includes the power to determine the admissibility, relevance and significance of any evidence before it. So an arbitrator is not bound by the strict rules of evidence of courts of law.

It is for the arbitral Tribunal to lay down its own procedure during the arbitration proceedings. The law should however, be fair and reasonable. The tribunal may decide to ask the parties to adduce evidence by way of affidavits. In that case, it would be fair and just to allow cross-examination of the witness whose affidavit has been filed.

Apart from Arbitration, conciliation and mediation etc. are other methods for Alternate Dispute Resolution.

Question 59.
A specimen of Arbitration Agreement between two private companies to refer the dispute to two Arbitrators. On the assumed facts, examinee is expected to write minimum five main stipulations of the agreement. (Dec 2021, 5 marks)
Answer:
This agreement is made and entered into between Mr ………….. and Mr. ……………. on this …………. day of ………… 20…………. witnesseth as follows:

WHEREAS differences and disputes have arisen’between the parties abovementioned regarding the matter of ………….. and the parties could not mutually settle the matter. Now the parties agree that the matter as under be referred to arbitration to obtain an award:

1. For the purpose of final determination of the dispute, the matter will be referred to Mr ………….. nominated by one party and Mr ………….. nominated by the other party as arbitrators and their award shall be final and binding on both the parties.

2. If differences should arise between the said two arbitrators on the question referred to them, the said arbitrators shall select an umpire and the ward to be given by the umpire shall be final and both the parties hereby agree that the award so given by the umpire or arbitrators shall be binding on both the parties.

3. A reasonable time limit may be fixed after consulting the arbitrators for the grant of the award by them and umpire, if appointed, and the said time may be extended in consultation with the arbitrators or umpire, if need be.

4. The provisions of the Arbitration and Conciliation Act, 1966 so far as applicable and as are not inconsistent or repugnant to the purposes of this reference shall apply to this reference of arbitration.

5. Both the parties agree that they would co-operate and lead evidence etc., with the arbitrator so appointed as expeditiously as possible and it is an express condition of this agreement, that if any of the parties non-cooperate or is absent at the reference, the arbitrators would be at liberty to proceed with the reference ex-parte.

6. The parties hereto agree that this reference to arbitration would not be revoked either by death of either party or any other cause.

7. It is ariexpress stipulation that any award passed by the said arbitrators shall be binding on the parties their heirs, executors and legal representatives.

Having agreed to the above by both the parties, the said parties affix their signatures to this agreement this ………….. day ………….. 20………….. at

Signature I
Signature II

Question 60.
Is attestation, registration and stamping is necessary for an Agreement? (Dec 2021, 4 marks)
Answer:
Attestation: It is not necessary for an agreement to be attested by any witness. But agreements are usually attested by one witness. Where registration is desired the agreement should be attested by two witnesses. Registration: Agreements not relating to immovable property and agreements not creating an interest in immovable property are not compulsorily registerable. Only agreements creating an interest in immovable property worth more than ?100 are required by law to be registered.

Stamp Duty: For the purpose of stamp duty, agreements are covered by Article 5 of schedule I to the Indian Stamp Act, 1899. The stamp duty for different kinds of agreements varies from State to State. While drafting an agreement draftsman should ascertain the proper stamp duty having regard to the changes made in the Stamp Act in the State where the agreement is executed.

Question 61.
In the light of Judicial pronouncement(s) discuss the following (a) Stamp Duty and Registration of Gift Deed. (Dec 2021, 4 marks)
Answer:
Stamp duty and registration of gift deed :-

The value of the property gifted must be set forth in the deed of gift. Stamp duty is payable on gift deed as on the conveyance as per amount of value of the property as mentioned in the Deed or as per market value of such property whichever is greater as per Article 23 of the Indian Stamp Act, 1899.
If the value of the property is intentionally omitted is under-valued with a view to defraud the revenue, prosecution may be invited under section 64 of Indian Stamp Act 1899.
(Muhamad Muzaffar AN ILR 44 Allahabad 339 FB). Further, penalty provisions under Gift-tax Act may also be attracted.
Gift deed of immovable property is mandatory registrable as per section 123 of the Transfer of Property Act and Section 17(1 )(a) of the Registration Act, 1908, whatever may be the values.

Question 62.
Draft the following as per the instructions (Assume facts, if required):
Will in favour of a Minor Son. (June 2022, 4 marks)

Question 63.
Draft the following as per the instructions (Assume facts, if required): (June 2022)
(i) Specimen Deed of Guarantee for the Performance of a Contract. (4 marks)
(ii) Petition for grant of probate of a will. (4 marks)

Question 64.
Explain probate and Letters of Administration. (June 2022, 4 marks)

Question 65.
Write a note on Electronic Data Interchange (EDI). (June 2022, 4 marks)

Question 66.
Dinson Inc., a Malaysian food processing company intending to expand its business in India plans to form a joint venture with Himalaya Agro Pvt. Ltd., a company incorporated under the Companies Act, 2013, engaged in the business of processing and marketing of food products. You are required to draft a specimen joint venture agreement for establishing the business with assumed data. (Dec 2015, 8 marks)
Answer:
Specimen Joint Venture Agreement
(Joint Venture with Foreign Company)

THIS AGREEMENT IS MADE on this …………… day of 2016 BETWEEN Dinson Inc. incorporated under the appropriate laws of the Malaysia having its office at the Kuala Lumpur, Malaysia of the ONE PART and Himalaya Agro Private Ltd. a company registered under the Companies Act, 2013 having its office at 99, Chowringe Road, Calcutta, West Bengal – 700071 of the OTHER PART.

WHEREAS DINSON INC. (hereinafter referred to as DINSON) carries on business of food products and intends to expand its market here in India and elsewhere.

Whereas HIMALAYA AGRO PRIVATE LTD. (hereinafter referred to as HIMALAYA AGRO) carries on business as food processor and marketing of food products and intends to extend its market here in India and abroad. Whereas Dinson and HIMALAYA AGRO intend to co-operate in dealing and exporting in food products in India and abroad for mutual benefit by setting up a new company.

NOW THESE PRESENTS WITNESSETH and the parties hereby agree as follows:
1. A joint-stock company would be formed under the name and style of Indo-Malaysian Company Pvt. Ltd. under the Companies Act, 2013 having its Registered Office at 99, Chowringe Road, Calcutta 700071.

2. DINSON and three of its nominees and HIMALAYA AGRO and three of its nominees would be the subscribers to the Memorandum and Articles of Association of the said company to be incorporated.

3. The shareholding in the Share Capital of the said company to be incorporated would be in equal proportions between DINSON and HIMALAYA AGRO.

4. The Memorandum and Articles of Association of the company proposed to be incorporated would be settled in mutual consultation and the same would govern the rights and obligations of DINSON and HIMALAYA AGRO in relation to the said proposed company.

5. DINSON will be allotted shares in the said new company partly in cash and partly towards the cost of plant, machinery and equipment to be supplied by DINSON to the new company and in consideration for assignments by DINSON of its Patent Rights, Trade Marks, Trade Names and Licences in favour of the new company to be incorporated. The consideration for allotment of shares to DINSON would also include the supply and transfer of technical formula, new inventions, secret processes, technical information concerning the production, manufacturing, testing, specifications, instructions and information as to the manufacture of development, use and servicing, maintenance and improvement of quality of Food Products and generally in connection with the successful carrying on of the said business by the said new company to be incorporated.

6. Will furnish necessary technical assistance and expertise to the new company for assembling, installation, start-up and for smooth running of the manufacturing and selling processes as might be required by the new company from time to time.

7. Will furnish to the new company all other technical assistance and advice in relation to the operation of the plant and machinery, repairs thereof, testing facilities, training facilities and Research & Development facilities should be arranged for, provided and continued for successful running of the business of the new company.

8. The shares that would be allotted by the new company should not be transferred by either DINSON or HIMALAYA AGRO within a period of five years from the date of allotment and thereafter if any of the parties intends to transfer any share then the same shall be offered first to the other pDarty at a price to be determined by a Valuer to be appointed by mutual agreement and in absence by application to the Indian Chamber of Commerce.

9. The new company will manufacture food products and allied accessories and products and the same would be marketed in India and exported to other countries under the Trade name or Brand name made available by DINSON and by any other name and shall obtain new Trade Mark and obtain Patents for further and better manufacturing, selling and exporting the new company’s products.

10. DINSON will buy 75% of the products of new company for exporting; to other countries through its own organisations or outlets at a remunerative price not below the price at which the products are sold in India.

11. Neither party shall carry on their own business in a manner which will directly adversely affect the business and profitability of the new company.

12. The expenses for the setting up and promotion of the new company would be shared equally by DINSON and HIMALAYA AGRO.

13. The consideration for allotment of shares of the new company to DINSON shall be paid in cash and in kind such as by transfer of immovable properties for the setting up of factory and making arrangement for the office accommodation of the new company. The valuation of such immovable properties including office accommodation would be decided by mutual agreement between DINSON and HIMALAYA.

14. Any disputes or differences arising in relation to this agreement, its construction, validity, performance, breach or any other question shall be referred to the Indian Chamber of Commerce for settlement by Arbitration or Conciliation in Calcutta and the decision of the said Arbitrator shall be final and binding on both the parties.

15. This agreement is made subject to obtaining approvals of the Indian Government and other concerned authorities.

16. In the event certain additions or alterations are required under this agreement due to imposition of certain terms and conditions by Government of India or appropriate authority granting the approval shall be incorporated in this agreement by way of a supplemental agreement and if required the Memorandum and Articles of Association of the new company would also be in confirmity with such directions or approvals of the appropriate authorities.

17. IN WITNESS WHEREOF the parties hereto have signed, sealed and delivered these presents on the day, month and year first above-written. Signed, sealed and delivered by
Mr ………………….
pursuant to the Board Resolution
dated of DINSON Inc. Signature
in Calcutta in the presence of:
1 ……………………………………..
2 ……………………………………..
Signed, sealed and delivered by
Mr ……………………………………..
Pursuant to the Board Resolution dated …………………. of HIMALAYA AGRO PRIVATE Ltd. Signature

in the presence of:
1 ……………………………………..
2 ……………………………………..

Question 67.
X Co. Ltd. intends to hire the operational staff like Malis, Sweepers, Security Guards, Typists etc. for its office in New Delhi. As a Company Secretary in practice, advice the management of X Co. Ltd. about the benefits of outsourcing the staff rather than direct recruitment. Also draft a specimen of the outsourcing agreement to be entered into with the Service Provider Company. (June 2017, 8 marks)
Answer:
Outsourcing is the contracting out of a company’s non-core, non-revenue producing activities to specialists. It differs from contracting in that outsourcing is a strategic management tool that involves the restructuring of an organization around what it does best – its core competencies.

Two common types of outsourcing are Information Technology (IT) outsourcing and Business Process Outsourcing (BPO), BPO includes outsourcing related to accounting, human resources, benefits, payroll, and finance functions and activities. Knowledge Process Outsourcing (KPO) includes outsourcing related to legal, paralegal, and other highly skilled activities.

The benefits of outsourcing are as under:

Direct hiring of the staff becomes a permanent liability, it is very difficult to select right type of persons and it is equally difficult to remove them in case of any trouble.
Recruitment and selection is costly and time consuming. Hiring through outsourcing is comparatively very convenient and cost effective.
Lot of flexibility is there for hiring through outsourcing where as in direct recruitment, there is hardly any flexibility.
Staff hired through Service Provider is more sincere, active and efficient as compared to own staff.

Outsourcing Agreement:
This Agreement is made on this ……………….. day of June …………….., 2017 between ABC Co. Ltd. (hereinafter referred to as the Company), registered under the Companies Act, 1956, having registered office at Orchard Road, Modern Complex, New Delhi and acting through Mr. Mohan, Managing Director of the Company and M/s Lotus Service Providers (hereinafter referred to as Service Provider), a Partnership Firm having its office at S6- Defence Enclave, New Delhi and acting through Mr. Karan, Managing Partner of the Firm.

Whereas the Company is in need of the operational staff like typist, mails, sweepers, security guards, etc. for its registered office at Orchard Road, New Delhi.

And

Whereas the Service Provider has approached the Company for hiring and providing of the desired operational staff on outsourcing basis.
Now it is agreed by and between the parties hereto as follows:
I. Obligations of the Service Provider

That the service provider will hire and depute requisite number of staff like typist, malis, sweepers, security guards, etc. as and when demanded by the Company.
That the staff to be hired and deputed should be in the age group of 25-35 years of age and should have a minimum of 2 years experience.
That due compliance of labour laws like contribution to PF, ESI, etc. will be the responsibility of the service provider. Proof for the payment of PF and ESI contribution will have to be submitted alongwith the monthly bills to be raised for claiming the wages of the deputed staff.
That the staff so deputed should have proper police verification and resident/identity proof.
That the Service Provider will be liable for the work and conduct of the staff deputed with the company. If case any request is received for change or substitution of any person, the same is attended immediately.

II. Obligations of the Company

That the Company will pay wages equivalent to the minimum wages as fixed by the Labour Department from time to time.
That the Service Provider will be allowed commission of 10% on the total salary/wages bill for each month based upon the minimum wages fixed by the Labour Department.
That the company will make demand for the require staff atleast 10 days in advance to the Service Provider so as to enable it to hire and depute the staff.
That the staff deputed by the Service Provider would be eligible for weekly off and other holidays as per the rules of the Company.

III. That in case any dispute arises with respect to the interpretation of any
terms and conditions, the matter would be referred for arbitration. Each party will have a right to appoint one of their representatives as the arbitrator. The arbitration proceedings would be as provider under Arbitration and Conciliation Act, 1996.

In witness whereof, both the parties, set their hands, this ………………. day of …………………. 2017.

Witness 1 For and on behalf of the Company
Witness 2 For and on behalf of the Service Provider

Question 68.
Aviksh is the owner of a flat (Flat No. 304, admeasuring 1500 sq. ft) in Poornaprajna Co-operative Housing Society Ltd.; the ownership of the said flat is evidenced by Share Certificate No. PP 37. Aviksh now proposes to sell this flat to Sudharshini for a total consideration of ₹ 45 lakh. It is agreed that ₹ 15 lakh would be paid as earnest money at the time of execution of agreement to sell and the balance amount of ₹ 30 lakh would be paid upon execution of the deed of conveyance.

Draft an agreement to sell based on the above facts. Assume other data, where necessary. (June 2018, 8 marks)
Answer:
Agreement to Sell
THIS AGREEMENT OF SALE executed on the ……………….. day of ………………… 2018, between

Mr. Aviksh, S/o ……………. aged ………………. years, resident of …………………. having Aadhar Number ………………. hereinafter called the vendor of the one part and

Ms. Sudharshini, daughter of ……………….. aged ………………… years, resident of ……………….. having Aadhar Number ……………. hereinafter called the purchaser of the other part,

(The expressions “Vendor” and “Purchaser” wherever they occur in these presents, shall unless the context otherwise admits, also mean and include their respective heirs, executors administrators, legal representatives and assigns).

WHEREAS the vendor is the sole and absolute owner of the Flat No. 304, admearsuring 1500 sq. ft. in Poornaprajna Co – operatives Housing Society Limited; the ownership is evidenced by Share Certificate No. PP 37, morefully described in Schedule hereto and hereinafter referred to as Schedule Property:

AND WHEREAS it is agreed that the vendor shall sell and the purchaser shall purchase the said property free of all encumbrances as pe terms and conditions as hereinafter agreed:

NOW THIS AGREEMENT OF SALE WITNESSETH AS UNDER:
1. The Total consideration payable for the Schedule property shall be ₹ 45 Lakhs (Rupees Forty Five Lakhs only) free of all encumbrances.

2. The purchaser has paid today a sum of ₹ 15 Lakhs (Rupees Fifteen Lakhs only) by way of earnest money for the due performance of this agreement, the receipt of which the vendor hereby admits and acknowledges.

3. The time for performance of the agreement shall be ……………… months or such other mutually agreed date. It is agreed that time is the essence of this agreement.

4. The purchaser shall pay the balance amount of ₹ 30 Lakhs (Rupees Thirty Lakhs only) to the vendor at the time of registration of the conveyance deed.

5. The vendor agrees that he will deliver vacant possession of the property to the purchaser before registration of the conveyance deed.

6. The vendor shall execute the conveyance deed in favour of the purchaser or his nominee as the purchaser may require. The vendor shall hand over all the title deeds of the property to the purchaser or an advocate nominated by him within ……………….. days from the date of this agreement for scrutiny of title and the opinion of the vendor’s advocate regarding title to the property shall be final and conclusive. The purchaser shall duly intimate the vendor about the approval of title within days after delivering the title deeds to him or to his advocate.

7. The vendor shall not sell, dispose off or alienate the property on and from this date and in case of any breach hereof, this agreement to sell shall be voidable at the option of the purchaser.

8. If the purchaser commits a breach of the agreement, he shall forfeit the earnest amount of ₹ 15 Lakhs (Rupees Fifteen Lakhs) paid by her to the vendor.

9. If the vendor commits a breach of the agreement, the vendor shall refund the earnest money of ₹ 5 Lakhs (Rupees Fifteen Lakhs) paid to him by the purchaser.

10. Nothing contained in Paras 8 and 9 above shall prejudice the rights of the parties hereto specific performance of this agreement of sale / purchase.

IN WITNESS WHEREOF the vendor and the purchaser have set their respective hands to the agreement of sale / purchase on the day, month and the year above written, in the presence of the following witnesses :

Witnesses:
1.
2.

Sd/- Vendor
Sd/- Purchaser

Schedule of Property
Flat No. 304, admearsuring 1500 sq.ft, in Poornaprajna Co – operatives Housing Society Limited, the ownership is evidenced by Share Certificate No. PP 37. Bound on
North is ……………………….
South is ……………………….
East is …………………….
West is ……………………

Question 69.
The employees registered union of ABC Ltd., proposes to construct a temple on half acre vacant plot adjoining factory dispensary in the factory campus. The local authorities and labour welfare officer also recommended the proposal and grant NOC for the same. The managing director of the company, ‘XYZ’, asked the Company Secretary to examine it, report and if worth approving put up a draft deed for consideration of the Board. The Company Secretary recommends it on the following main terms: (Dec 2019, 10 marks)

Draft deed will be prepared by the Company and executed by the Temple Management Committee (TMC).
Temple will be constructed with in six months.
Annual rental of ?100/- shall be payable by TMC to ABC Ltd. by the first week of January every year.
Employees will not be charged with any fees, donations etc, however may be accepted in case of volunteer.
Proper cleanliness at all times, will be the responsibility of TMC.
Company’s authorized officers shall be allowed to inspect temple premises on a one-week time notice, and TMC will be bound to follow their instructions.
Jurisdiction clause will be the local jurisdiction of the ABC Ltd., in case of any dispute. Though Arbitration Clause will also be mentioned.

On the basis of the terms by the Company Secretary of ABC Ltd., you are required to draft a Deed of Grant of Land for temple in the factory premises. Assume other facts, if required.
Answer:
This grant is made on the 1st September, 2019 between ABC Ltd (herein after called the grantor) of the one part, and Temple Management Committee (TMC) (herein after called the Grantee) of the other part; Whereas the grantee on 1st July 2019 applied to the Grantor for the grant of Grantee’s land admeasuring half an acre, which is lying vacant adjoining the Company’s Dispensary in factory complex, for the purpose of building a temple thereon;

AND WHEREAS the grantor has agreed with the grantee to grant him for the said purpose the land hereby transferred belonging to the grantor on the terms and conditions hereinafter contained;

AND WHEREAS the grantee has accepted the said grant for the said purpose and on the terms and conditions hereinafter contained.

Now, THIS DEED WITNESSES’ AS FOLLOWS:-
1. In pursuance of the aforesaid agreement and in consideration of the Grantee’s covenants hereinafter contained, and for the purpose of promoting, religion worship, the grantor hereby grant’s and transfers to the Grantee ALL THAT PLOT of land etc., TO HOLD THE SAME to the grantee and his Successors according to custom of Succession in the management of religious endorsements recognized by the religion professed by the Grantee for the purpose of a Temple and for no other purpose (excluding ancillary purposes) in accordance with the covenants and the provision hereinafter contained.

2. Grantee hereby covenants with the grantor as follows:-
(i) He will within six months from the date hereof erect a temple of the value of ₹ ……………… on the said premises and will not use the said premises for any other purpose whatsoever.

(ii) If the grantee fails to erect a temple within the said period of six months, the said premises shall revert to the grantor.

(iii) Such temple, when erected shall be open to all human beings without any distinction of caste or creed to enter the said temple for worship and prayer and for no other purpose.

(iv) The grantee has undertaken to pay a sum of ₹ 100/- as annual rental to the grantor to be paid before first week of January every year in advance.

(v) The grantee shall not charge any fee, donations etc. from the employees of the grantor except by way of voluntary contributions for the benefit of the temple.

(vi) The grantee shall be bound to maintain proper cleanliness in the temple premises at all the times.

(vii) The grantee and his successors shall at all time hereafter keep such temple in good and substantial repair and will at his or their own cost perform all ceremonies of worship therein according to the religion professed by the grantee.

(viii) The grantee and his agents shall, on a prior notice of one week, permit at all reasonable times, the authorized officers of the company to examine the condition of the temple premises.

(ix) If the said premises shall cease to be used for the purpose of a temple then the said premises and all buildings thereon shall revert to the grantor.

(x) In case of any dispute arising out or concerning the terms of this deed, the same shall be referred to _____________ for arbitration whose decision thereon shall be final and binding on the parties.

(xi) In case of any other disputes arising out of or in any way connected with this deed the same shall be deemed to have arisen in _________ and only courts in __________ shall have jurisdiction to determine the same.

In witness whereof, etc. —
Signed, sealed and delivered.

ABC Ltd on this _______ day of 2019 at ________ place.
GRANTOR
Temple Management Committee (TMC).
GRANTEE

Both signed by Grantor Grantee and two witness
And registered as per law.

Question 70.
Turfy Pvt. Ltd. wants to offer online shopping services to its customers. Some of the products are stocked with Doodle Warehouses while others are stocked with the manufacturers. Outline the scope of services provided by Turfy Pvt. Ltd. restricting the liabilities in case of defects found in products sold through the Turfy Pvt. Ltd. website. Further, illustrate the important disclaimers regarding use of the website by the customers while drafting the e-contract, in case of loss or damaged suffered by the customers while availing services of Turfy Pvt. Ltd. (June 2022, 8 marks)

Drafting and Conveyancing Relating to Various Deeds and Documents-I Notes

Introduction

Contract = an agreement enforceable by law.
No particular form is prescribed for drawing up of contracts, except that they must fulfill all the essential requirements of a valid contract.
The terms and conditions (T&C) should be incorporated properly.
e.g. the T&C related to sale – purchase contracts will include:
Quality & Quantity of goods
Price (GIF / FOB etc.)
Delivery period
Mode of payment
insurance
Taxes (i.e. who will bear the taxes)
Exchange rate (in case of international transactions)
Place of jurisdiction.

E-contract
E-contract (contract that is not paper based but rather in electronic form) is any kind of contract formed in the course of e-commerce by the interaction of two or more individuals using electronic means, such as e-mail, the interaction of an individual with an electronic agent, such as a computer program, or the interaction of at least two electronic agents that are programmed to recognize the existence of a contract. Traditional contract principles and remedies also apply to e-contracts. This is also known as electronic contract.

Essentials of E-contract
As per the Indian Contract Act, the essentials of a contract are:

An offer or proposal by one party and acceptance of that offer by another party resulting in an agreement consensus-ad- idem.
An intention to create legal relations or an intent to have legal consequences.
The agreement is supported by lawful consideration.
The parties to contract are legally capable of contracting.
Genuine consent between the parties.
The object and consideration of the contract is legal and is not opposed to public policy.
The terms of the contract are certain.
The agreement is capable of being performed i.e., it is not impossible of being performed.

Leave and License Agreement
Leave and License Agreements are preferred by the parties to get out of the rigours of landlord-tenant relationship. Many types of agreements are made for the occupation of property like lease deeds, lease or tenancy agreements, rental agreements etc. Despite these agreements, most owners prefer to give their premises on leave and license basis rather than tenancy or lease basis.

The process of eviction of tenants is generally difficult. The law is tilted in favour of the tenant for various purposes. Generally it is being witnessed that a person having a vacant apartment will never rent it out fearing what if the tenant decides not to vacate and makes the apartment his own. That is why tenancy has been put on the backburner and Leave and License is now the most popular option.

Important Points in Regard to Drafting of Contracts (All Types of Contracts)

Licenses and Permits
Taxes, Duties and Charges
Quality, Quantity and Inspection of Goods
Packing
Shipment of the Goods
Insurance
Documentation
Guarantee
Passing of the Property and Passing of the Risks
Amount, Mode & Currency of Payment
Force Majeure
Proper law of contract
Additional Guidelines Regarding Agreement to Sale / Purchase
Some terms & Conditions in the Agreement to Sale / Purchase
Dealership contract.

Del – Credere Agency

Del-Credere Agency = Agency + Guarantee
The difference between a del credere agent and other agents is that he guarantees that those persons to whom he sells perform the contracts which he makes with them.
He charges some extra remuneration i.e. the del credere commission to undertake this liability to guarantee the due performance of the contract by the buyer.
Thus, he indemnifies his principal against the loss which may occur due to the non performance of the contract.

Collaboration Agreements

It includes agreements for exchange of:
- technical know – how
- technical designs & drawings
- training of technical personnel
If the agreement is between a party within India and a party abroad, it’s know as “foreign collaboration agreements”.

Arbitration Agreements

As per the Arbitration and Conciliation Act, 1996, arbitration agreement means:
- an agreement by the parties
- to submit to arbitration
- all or certain disputes
- which have arisen / may arise between them
- in respect of defined relationship
In other words, it refers to an agreement for the settlement of disputes by a third person without going to a Court of law.
The consent to submit dispute to arbitration must be in writing.

Pre-Requisites of Arbitration

A dispute between parties, requiring a settlement;
Its submission for settlement to a third person;
A decision by such third person according to his judgement of the dispute, which is binding on both the parties.

Arbitration

Arbitration is a means for the quick and economical settlement of a dispute between two contracting parties by a third person called “arbitrator.” In case of more than 1 arbitrator, it’s called “arbitral tribunal.”
The arbitrator is not bound by strict rules of courts of law.
The decision given by the arbitrator / arbitral tribunal is called an “Award.”

Requisites of an award
The general requisites of an award are:

it must be consistent with the submission
it must be certain
it must be fair to the parties
it must be final
its implementation must be possible.

Guarantee – Meaning and Types

A “contract of guarantee” is
1. a contract
2. to perform the promise or discharge the liability
3. of a third person
4. in case of his default
The person who gives the guarantee is called “Surety.” The person in respect of whose default the guarantee is given is called “Principal Debtor.” The person to whom the guarantee is given is called “Creditor.”
It’s not necessary that the consideration should flow from the creditor to the Surety. Consideration between the creditor and the principal debtor is good consideration for guarantee given by surety.
Once the principal debtor has defaulted and the surety has performed all that he is liable for, he’s vested with all the rights the creditor has against the principal debtor. This is called the Right of subrogation of the surety.

Types of Guarantee
Continuing Guarantee
It extends to a series of transactions.

Fidelity Guarantee
Here, the employer is guaranteed against the misconduct of an employee.

Counter Guarantee
As the name suggests, it’s a guarantee given by the principal debtor to the surety to indemnify him against any loss suffered due to the default on the part of the Principal Debtor.

Performance Guarantee
It’s a guarantee which ensures the contracted performance of another person. Rest is same like a normal guarantee.

Bank Guarantee
It’s a guarantee given by a bank on behalf of its client or account holder to another person with whom the client has entered into a contract and call upon the bank to pay the guaranteed amount in the event of any contingency.

Hypothecation and Pledge:
The meaning of both hypothecation and pledge can be better understood by having a comparative study of both these terms are under.

Basis	Hypothecation	Pledge
1. Meaning	Hypothecation is a type of transaction whereby legal property in goods passes to the money lender But the possession doesn not pass	Pledge is a bailment of the goods for payment of a debt or performance of a promise (bailment = transfer of possession)
2. Governing Act	It’s not governed by any laws but governed by principles of equity & justice.	It’s governed by Sections 172-176 of Indian Contract, 1872.
3. Possession of goods	Here, the goods remain in the possession of borrower.	Here, the possession of goods is transferred to the money lender.
4. Parties	Hypothecator & Hypo- thecatee.	Pawnor & Pawnee.
5. Example	A working capital loan given by a bank on the basis of goods which still remain in the possession of borrower is an example of Hypothecation.	Mr. A delivers his goods to Mr. B as a security for the payment of a debt of ? 50,000 payable by Mr. A to Mr. B. This is an example of pledge.
6. Will	‘Will’ means the legal declaration of the intention of a testator with respect to his property, which he desires to be carried into effect after his death [ Section 2(h) of Indian Succession Act, 1925].
7. Types of Wills	Under the Indian Succession Act, Will can be Privileged Will or Unprivileged Will. Privileged Will : Any soldier being employed in an expedition or engaged in actual warfare, or an airman so employed or engaged, or any mariner being at sea, may, if he has completed the age of eighteen years, dispose of his property by a Wills made in the manner provided in Section 66. Such Wills are called privileged Wills. Unprivileged Will: Wills made by the persons other than stated above are Unprivileged Will. Such Wills are required to be in writing, signed by testator and attested by the two witnesses (except those made by Mohammedans). It is governed by Section 63 of the Indian Succession Act.
8. Gift	Gift has been defined under Section 122 of the Transfer of Property Act, 1882. Section 122 states that ‘Gift’ is the transfer of certain existing movable or immovable property made voluntarily and without consideration, by one person, called the donor, to another, called the donee, and accepted by or on behalf of the donee. Such acceptance must be made during the life time of the donor and while he is still capable of giving. If the donee dies before acceptance, this gift is void. For the purpose of making gift of immovable property, the transfer must be affected by a registered instrument signed by or on behalf of the donor and attested by at least two witnesses. For the purpose of making gift of movable property, the transfer may be affected either by a registered instrument signed as aforesaid or by delivery. Such delivery may be made in the same way as goods sold may be delivered.

Drafting and Conveyancing Relating to Various Deeds and Documents-I – Drafting, Pleadings and Appearances Study Material

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