Property Law For Business


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Property Law For Business

  1. 2. <ul><li>Classification of Property </li></ul><ul><li>Contract of Sale – Movable Property </li></ul><ul><li>Borrowing against Property as security </li></ul><ul><li>Hire Purchase of Property </li></ul><ul><li>Lease of Property </li></ul><ul><li>Exchange/Gilt/Assignment of Property </li></ul><ul><li>Intellectual Property Rights (IPR) </li></ul>
  2. 3. <ul><li>Transfer of Property Act 1882 </li></ul><ul><li>Sales of Goods Act 1930 </li></ul><ul><li>Indian Trusts Act 1882 </li></ul>
  3. 4. <ul><li>The term property is used to signify the thing over which the right of ownership is exercised. Ownership is said to exist when </li></ul><ul><li>The right is available against the whole world (jus in rem) </li></ul><ul><li>Over a determinate thing </li></ul><ul><li>Indefinite in point of user </li></ul><ul><li>Unrestricted in point of disposition </li></ul><ul><li>Unlimited in point of duration </li></ul>
  4. 5. <ul><li>Movable and Immovable Property </li></ul><ul><li>Tangible and Intangible Property </li></ul>
  5. 6. <ul><li>Movable property is usually referred to as goods. They are liable to be consumed or destroyed in usage and are not the subject of perpetual or uniform enjoyment </li></ul><ul><li>Immovable property is indestructible and is capable perpetuity or uniform continuity of use or enjoyment </li></ul>
  6. 7. <ul><li>Movable Property is usually referred to as goods. According to sec 2 (7) of the Sales of goods Act , 1930 , Goods means every kind of movable property other than actionable claims and money and includes stocks and shares, growing crops, grass and things attached to or forming part of land. </li></ul><ul><li>Immovable Property is dealt under Transfer of Property Act, 1882 . It is indestructible and is capable of perpetuity or uniform continuity of use or enjoyment. </li></ul>
  7. 8. <ul><li>Property, the physical existence of which can be gauged and maintained by a person is called tangible property. </li></ul><ul><li>Property which is not tangible or cannot be touched is called Intangible property. </li></ul>
  8. 9. As per section 4(1) of the Sale of Goods Act, a contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. Such contract of sale may either be absolute or conditional. As per section 4(3), it deals with the concept of an agreement to sell and stipulates that where the transfer of property in the goods is to take place at the future time or subject to some condition thereafter to be fulfilled, such a contract is an agreement to sell.
  9. 10. Basis Sale Agreement to Sell Transfer of Property Sale is an executed contract. In a sale, the property in the goods passes from the seller to the buyer immediately so that the seller is no more the owner of the goods sold. An agreement to sell is an executory contract. In agreement to sell, the transfer of property in the goods is to take place at a future time or subject to certain conditions to be fulfilled. Type of Goods A sale can only be in case of existing and specific goods. An agreement to sell is mostly in case of future and contingent goods Risk of Loss In sale, the loss falls on buyer even if goods are in possession of seller In this, loss falls on seller even if goods are in possession of buyer
  10. 11. Consequences of Breach In sale, the buyer falls to pay the price of the goods or if there is a breach of contract by the buyer, the seller can sue for the price even though they are still in his possession In an agreement to sell, if there is a breach of contract by the buyer, the seller can only sue for the damages and not for the price even though the goods are in possession of buyer Right to resell In sale, the seller cannot resell the goods if he does so the consequent buyer does not acquire title to the goods In case of resell, the buyer who takes the goods for consideration and without notice of the prior agreement, gets a good title. In such a case original buyer can only sue the seller for damages
  11. 12. General and particular Property A sale is a contract plus conveyance, and creates ‘jus in rem’, i.e, gives right to the buyer to enjoy the goods as against the world at large including the seller. An agreement to sell is merely a contract, pure and simple and creates ‘jus in personam’ i.e. gives a right to the buyer against the seller to sue for damages. Insolvency of Buyer In a sale, if the buyer becomes insolvent before he pays for the goods, the seller, in the absence of a lien over the goods, must return them to the official receiver or assignee. He can only claim a rateable dividend for the price of the goods. In an assignment to sell, if the buyer becomes insolvent and has not paid the price, the seller is not bound to part with goods, until he has paid for.
  12. 13. Insolvency of Seller In a sale if the seller becomes insolvent, the buyer, being the owner, is entitled to recover the goods from the official receiver, or assignee. In an agreement to sell, if the buyer, who has paid the price, finds that the seller has become insolvent, he can only claim rateable dividend and not the goods because property in them has not yet passed to him.
  13. 14. <ul><li>Passing of Risk </li></ul><ul><li>Transfer of possession of the goods. </li></ul><ul><li>Transfer of ownership of goods from the seller to the buyer. </li></ul>
  14. 15. <ul><li>Goods must be ascertained </li></ul><ul><li>Property in the goods passes when intended to pass. </li></ul>
  15. 16. <ul><li>Property is transferred on transfer of title from the seller to the buyer. </li></ul><ul><li>For the transfer of defectless title, the seller should have a good title to the Goods. </li></ul><ul><li>‘ Nemo dat quod non habet’- No person can give a better title than he has. </li></ul>
  16. 17. A acquired certain goods from C by falsely representing that he was acting on behalf of B and was authorized to collect the Goods. A later sold the Goods to D. It was held that D did not acquire any title against C.
  17. 18. <ul><li>The seller of the Goods, though not being the owner of the Goods, can confer a better title to the buyer in following cases: </li></ul><ul><li>Where he sells the goods with the authority </li></ul><ul><li>and consent of the true owner. </li></ul><ul><li>Where the true owner does not deny the seller’s </li></ul><ul><li>authority to sell. </li></ul><ul><li>Where there is a sale by one of the joint owners. </li></ul><ul><li>Where there is a sale by person in possession under a </li></ul><ul><li>voidable contract. </li></ul><ul><li>Where there is a sale by seller in possession after the sale, provided the </li></ul><ul><li>second purchaser does not have notice of the defective title of the seller. </li></ul><ul><li>Where there is a sale by buyer in possession after having bought or agreed to buy goods, provided the second purchaser receives the same in good faith and without notice of any lien or other right of the original seller in respect of the goods. </li></ul><ul><li>Where there is a sale by an unpaid seller. </li></ul>
  18. 19. <ul><li>The Pawnee of goods is empowered to sell the goods pawned, under certain conditions. (Section 178 of the Indian Contract Act) </li></ul><ul><li>A thief or a finder of a negotiable instrument endorsed a blank or payable to bearer can give a good title to a person who purchases it for value and without notice of the defect in title. </li></ul><ul><li>The finder of goods is empowered to sell the goods if the true owner cannot be traced or where the goods are of a perishable nature. He can also sell the goods, where the lawful charges incurred in respect of the goods amount to the thirds of its value and the owner refuses to pay such lawful charges. </li></ul>
  19. 20. <ul><li>Buyer’s Right of examining the goods. </li></ul><ul><li>Acceptance of Delivery. </li></ul><ul><li>Buyer not bound to return rejected goods. </li></ul><ul><li>Re-sale of rejected goods. </li></ul><ul><li>Burden of expense. </li></ul>
  20. 21. <ul><li>A) Buyer's Liabilities will arise on fulfillment of following conditions: </li></ul><ul><li>Seller should have willing to deliver the goods </li></ul><ul><li>He should have asked the buyer to take the delivery </li></ul><ul><li>The buyer should have neglected to take delivery within a reasonable time after the request by the seller. </li></ul>
  21. 22. <ul><li>B) When buyer fails to take the delivery of the goods, he will be liable to the seller: </li></ul><ul><li>For any loss or damage incurred on failure to take delivery </li></ul><ul><li>For any reasonable charge incurred by the seller for taking care of the goods. </li></ul>
  22. 23. <ul><li>Right to have delivery of the goods as per the terms and conditions of the contract. </li></ul><ul><li>Where the goods delivered to the buyer are in excess or less than the quantity contracted for, the buyer can: </li></ul><ul><li>a) Accept the whole </li></ul><ul><li>b) Reject the whole </li></ul><ul><li>c) Accept the quantity ordered and reject the rest </li></ul><ul><li>Unless there is a contract to the contrary, the buyer is not required to accept delivery by installments. </li></ul><ul><li>Where goods are sent to the buyer by a route involving sea transit, the buyer has a right to be informed of the same so as to enable him to insure the goods. </li></ul><ul><li>The buyer has the right to examine the goods before he accepts them. </li></ul>
  23. 24. <ul><li>The buyer is required to take the delivery of the goods and make payment according to the terms of contract. </li></ul><ul><li>Apart from any express contract, it is the duty of the buyer to apply for the delivery. </li></ul><ul><li>The buyer’s duty includes a demand to make delivery at a reasonable hour. </li></ul><ul><li>Where the seller agrees to deliver the goods at his own risk at a place other than where they are sold, the buyer shall take any risk of deterioration in the goods necessarily incident to the course of transit. </li></ul><ul><li>It is the duty of the buyer to give notice of rejection of goods to the seller. </li></ul><ul><li>The buyer should take delivery of goods within a reasonable time. </li></ul><ul><li>Where the property in the goods passes to buyer, it is his duty to pay price according to the terms of contract. </li></ul><ul><li>Where the buyer wrongfully neglects or refuses to accept and pay for the goods, he will have to compensate the seller, in a suit by him, for damages for non-acceptance (Section-56) </li></ul>
  24. 25. <ul><li>As per Sec 45 of the sale of Goods Act 1930, the seller of goods is deemed to be an unpaid seller: </li></ul><ul><li>When the whole of the price has not been paid. </li></ul><ul><li>When a bill of exchange or other negotiable instrument has been received as conditional payment and the condition on which it was received has not been fulfilled by reason of the dishonor of the instrument. </li></ul>
  25. 26. <ul><li>If the property in the goods may have passed to the buyer , the unpaid seller of the goods have following rights: </li></ul><ul><li>Lien on the goods. </li></ul><ul><li>Right of stopping the goods in transit. </li></ul><ul><li>Right of re-sale. </li></ul>
  26. 28. <ul><li>The goods should be in transit </li></ul><ul><li>The buyer should have become insolvent </li></ul>
  27. 29. <ul><li>The Unpaid seller of goods who is in possession of them is entitled to retain such possession until payment or tender of the price in the following cases: </li></ul><ul><li>Where the goods have been sold without any stipulation as to credit. </li></ul><ul><li>Where the goods have been sold on credit, but the term of credit has expired. </li></ul><ul><li>Where the buyer becomes insolvent. </li></ul>
  28. 31. <ul><li>Hypothecation is not a statutory creation but is a product of trade usage. It is a kind of pledge where pledged goods remain in the possession of the pledger for his use. Hypothecator holds such goods as an agent and not as the owner. </li></ul><ul><li>The goods are liable to be returned to the hypothecatee under the circumstances stated in the contract. If the hypothecator refuses to return the goods to the hypothecatee, then the hypothecatee has a right to seek court help in recovering them. </li></ul>
  29. 32. <ul><li>Pledge: </li></ul><ul><li>Pledge goods are stored in godown under the lock and key of bank under the bank’s supervision. </li></ul><ul><li>They remain in the physical possession of the bank and no withdrawals or additions in stock are permissible without bank permission. </li></ul><ul><li>Hypothecation: </li></ul><ul><li>Hypothecated goods are not under the lock and key of the bank. </li></ul><ul><li>They are allowed to be kept at the premises of the borrower without any lock and key of the bank as such but are supposed to be under constructive possession of the bank. </li></ul>
  30. 33. Mortgage means transfer of an interest by pledging (delivering) a property as security against an advance as loan or existing or future debt or for performance of an act or engagement which gives rise to the liability. According to section 58 (a), “A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced by way of loan or existing or future debt or for performance of an act or engagement which gives rise to a liability.”
  31. 34. <ul><li>Transfer of Interest </li></ul><ul><li>Specific Immovable Property </li></ul><ul><li>Security </li></ul><ul><li>Consideration </li></ul><ul><li>Competence of Parties </li></ul><ul><li>Registration </li></ul>
  32. 35. <ul><li>Simple Mortgage [Section 58 (b)] </li></ul><ul><li>Mortgage by Conditional Sale [Section 58 (c)] </li></ul><ul><li>Usufructuary Mortgage [Section 58 (d)] </li></ul><ul><li>English Mortgage [Section 58 (e)] </li></ul><ul><li>Mortgage by deposit of title deeds [Section 58 (f)] </li></ul><ul><li>Anomalous Mortgage [Section 58 (g)] </li></ul>
  33. 36. <ul><li>Acc to sec 58(b), where </li></ul><ul><li>Without delivering possession of mortgaged property; </li></ul><ul><li>The mortgager binds himself personally to pay the mortgage money; </li></ul><ul><li>Agree that in the event of his failing to pay, the mortgagee have right to cause the mortgaged property to be sold, and the proceeds of sale to be applied, so far as may be necessary in payment of the mortgage money; and </li></ul><ul><li>The transaction is called a simple mortgage. </li></ul>
  34. 37. <ul><li>Acc to sec 58(d) of Transfer of property Act, where the mortgager- </li></ul><ul><li>Delivers possession, or expressly or by implication binds himself to deliver possession of the mortgaged property to the mortgagee; and </li></ul><ul><li>Authorizes him- </li></ul><ul><ul><ul><li>To retain such possession until payment of mortgage money </li></ul></ul></ul><ul><ul><ul><li>To receive the rents and profits accruing from the property or any part of such rents and profits </li></ul></ul></ul><ul><ul><ul><li>The transaction is called as usufructuary mortgagee </li></ul></ul></ul>
  35. 38. <ul><li>Acc to sec 58(e) of transfer of Property Act, where the mortgager binds himself- </li></ul><ul><ul><ul><ul><li>To repay the mortgage money on a certain date; </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Transfers the mortgaged property absolutely to the mortgagee, but subject to a provision, that the mortgagee will retransfer it to the mortgagor upon payment of the mortgage money as agreed; and </li></ul></ul></ul></ul><ul><ul><ul><ul><li>The transaction is called an English mortgage </li></ul></ul></ul></ul>