This article is written by Sachi Ashok Bhiwgade from Hidayatullah National Law University, Raipur. This article covers the basic differences and the essentials of novation, rescission and alteration of a contract under the Indian Contract Act, 1872.

Introduction

A contract to be legally enforceable should be valid. Section 10 of the Indian Contract Act, 1872 provides the essential conditions that are to be complied with for a valid contract. They are:

• Free consent; 
• Competency of the parties;
• Lawful consideration and lawful object;
• Not declared to be void under the law.

In case, a contract is entered into by the parties under coercion, threat, fraud, undue influence, etc such a contract will be invalid. Also, the object of contract should not be inconsistent with any other law.

The word ‘novation’ literally means to replace with a new contract and the same obligations are performed by different parties. Under novation, the liabilities under the existing contract are extinguished. The doctrine of novations is recognized under Section 62 of the Indian Contract Act, 1872. Every contract can be novated and novation can be effective only when there is a new contract and not a new agreement. Hence, mere agreement to substitute the existing contract will not be binding unless it has been accepted and executed mutually by all the parties. A new contractual obligation arises when parties novate a contract. 

What is novation of Contract?

Novation of contract means creating a new contract while the old one is terminated and need not be performed. It is an act substituting a new obligation or party in a contract for the old one. Further, the newly substituted agreement should be valid, enforceable, have consideration and should be by the mutual consent of the parties. Basically, it should fulfil the requirements of a valid contract.

When a contract is novated, the original contract ceases to exist and the parties have to follow the new contract. Section 62 of the Indian Contract Act states that “if the parties to the contract agree to substitute a new contract for it or to rescind it or alter it, the original contract need not to be performed.”

Essentials of Section 62 of the Indian Contract Act

• Consensus ad idem between the parties to a contract.
• There should be a previous contract entered into between the parties.
• Substitution, recession or alteration of a contract giving rise to a valid new contract.
• Termination of the original contract.

The basic requirement of Section 62 was discussed by the Supreme Court in the case of Lata Construction & Ors v. Dr. Rameshchandra Ramniklal Shah, novation requires a complete substitution of a new contract in place of the old one and only in that condition the original contract does not have to be performed. The new substituted contract should rescind or completely alter the terms of the original contract. In Ramdayal v. Maji Devdiji, the court observed that novation takes place by introducing new terms in the contract or by introducing new parties. A contract of novation requires a party to agree to extinguish or discharge his obligation or debt. Unless this has been accomplished there can be no novation. Therefore the test is to know whether the parties intended to enter into a new contract between them or not.

For novation to take effect, modification to the contract must go to the root of the original contract and change its essential character as held by the Calcutta High Court in the case of Juggilal Kamlapat v. NV Internationale.

Examples:

1. In a partnership firm, the liabilities of an old firm are taken over by the new firm.
2. A lease agreement, where the tenant gives the lease to another party and makes him responsible for the obligations and responsibility arising from the lease agreement. 
3. John owes 2 lakh rupees to Ram under a contract, Ram owes David 2 lakh rupees. Ram asked John to pay 2 lakh rupees to David in his place, but David does not agree and neither gives her consent to the agreement. Therefore, Ram still owes David 2 lakh hence, there is no new contract to enter.

Kinds of Novation of Contract

Novation is of two kinds: 

• Where the obligation under a contract is replaced with a new one, and
• Where a party is replaced by another party.

Change in terms of the contract

The parties to a contract have the freedom to enter into a contract and alter its terms by mutual consent. When both the parties mutually agree to change the term of the contract which they have previously entered into, then the new agreement becomes binding on them. However, in case there is a clause in the contract stating that the terms of the contract can be altered by one party (unilaterally) such changes in the terms will be considered as valid. Hence, a party cannot by unilateral term impose conditions which were not a part of the original contract. 

In the case of RS Amarnath Mehra v. Union of India, the court observed that calling of fresh rates at a lower price will not amount to a new contract. If a contract consists of a number of terms and conditions then it does not mean that each term or condition is a separate contract. 

Similarly, in the case of Ramji Dayawala & Sons (P) Ltd v. Invest Import, the Apex Court held that a contract having a number of parts should have been assented by the contracting parties in the same manner and in the same sense, that is, it should have consensus ad idem. 

Change in the parties to the contract

Under a novation agreement, it is possible that the terms of the contract provide for the replacement of one party to the contract by another party. This creates an obligation for one party in place of another party. Under this kind of contract, the new party assumes all the obligations under that contract and the party who has assigned his obligations to another party under such a contract will not be held liable for any future damages. 

For instance: if A and B are parties to a contract, and A agrees to replace C in B’s place, then the existing contract between A & B will cease to exist. 

In the case of Godan Namboothiripad v. Kerala Financial Corporation, the respondent (Kerala Financial Corporation) sanctioned loan to one Gopinath for purchasing a transport vehicle which was to be paid in instalments. He defaulted in making the payments and as a result of that, the respondent seized the vehicle. After that, the appellants executed an equitable mortgage confirmed to repay the balance amount. The court held that it was a novation of contract because the appellants took the liability to pay the dues and the original debtor (Gopinath Menon) ceased to be the debtor.

Difference between novation and assignment

The difference between novation and assignment is minimal but important and is discussed in the table below:

Novation of contract in an illegal agreement

The Court in Ratanlal son of Pannalalji v. Firm Mangilal Mathuralal observed that “if there is a direct connection between a fresh contract after novation and the earlier illegal contract or the earlier collateral contract, the novated contract would still continue to be illegal or immoral and the Court would refuse to enforce the same”.

When is it ‘No Novation’?

When the requisite conditions of novation are not satisfied then it will be considered as no novation. The Kerala High Court held in the case of Godan Namboothiripad v. Kerala Financial, that the essential features of a novation are the replacement or relinquishment of a right under the original contract by a new one and when these essential features are missing then, there will be no novation.

A unilateral act of one party

As discussed already, a party cannot on its own change the terms of the contract unilaterally. The Supreme Court in the case of Citi Bank N A v. Standard Chartered Bank held that novation, recission, and alteration under Section 62 requires that both the parties should agree to substitute, rescind or alter the existing contract with a new one. Such substitution, rescission or alteration has to be done bilaterally. In the case of Polymat India P. Ltd. & Anr vs National Insurance Co. Ltd. & Ors, it was held that the terms of a contract cannot be varied without the mutual agreement of the parties.

Intention of parties

All the parties to the contract have to agree to the new terms of the substituted contract. A novation contract will be ineffective when there is an absence of intention between the parties to alter, rescind or substitute a contract. In T.S. Duraiswami Aiyar And Ors. vs Krishnier, the court observed that substitution of one contract with another clearly depends upon the intention of the parties. Similar observation was made in the case of Calcutta Insurance, Madras vs Thirumalai Animal And Ors. and National Insurance Co. Ltd. v. Thirumalai Ammal And Ors. 

Rescission of Contract

To rescind means to cancel or revoke. Rescission under contract law means a party to the contract can cancel or terminate the contract. In this, the parties legally terminate a contract by mutual consent. Under Section 62, a party is allowed to rescind a contract but such rescission should only be in bilateral terms. 

In the case of Union of India v. Kishorilal Gupta and Bros, the Calcutta High Court held that a contract under Section 62 of the Indian Contract Act can be rescinded only after there has been a breach.

Difference between Rescission and Novation

Alteration in terms of a Contract 

Alteration in terms of contract happens when the parties enter into a contract and one of the parties wants to modify or change certain terms of the contract with the assent of the parties. Hence, once the parties sign the contract they cannot alter its term except in the case where all parties by the mutual consent agree to the alteration. For instance, change in the date or place of delivery in a contract of sale of goods between parties. 

The Apex Court in the case of United India Insurance Co Ltd v. MKJ Cooperation held that material alterations in a contract can only be done by mutual consent of the parties. 

In V Kameshwararao & Ors v. M Hemalathammarao, the court observed that a material alteration is one that varies the rights and liabilities of the parties ascertained by the deed or varies the legal effect of the instrument originally expressed.

Difference between Novation and Alteration

The basic difference between novation and alteration can be studied under the following table: 

Contents of novation agreement

A novation agreement may contain the following:

• Definitions;
• Name of the parties;
• Recitals;
• Representations;
• Rights of the third party;
• Obligations of all the parties;
• Effects of novation agreement;
• Fees, costs, expenses;
• Jurisdiction and the law governing the parties;
• Counterparts.

Conclusion

As already seen in this article novation happens when there is a change in the terms of the contract or when parties to the contract change. It is also necessary that all the parties have consented to the changes and have not acted upon the contract unilaterally. The new agreement should contain the requisites of a valid contract. 

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

The post Novation, Rescission, Alteration under the Indian Contract Act appeared first on iPleaders.

This article is written by J.Suparna Rao, from Ramaiah Institute of Legal Studies. This article discusses the concept of Auction Sale under the Sale of Goods Act, 1930. 

Introduction

There are two main terms involved i.e. Auction Sales, Goods. Let us first clearly understand the two terms.

Auction is nothing but selling of goods or property in a public sale where prospective buyers gather in a particular area to buy the goods or property. Auction sales involve the auctioneer and bidder who bids higher than the other to buy the property or goods. 

Goods mean anything of value which can be sold. So we further will see the two terms in accordance with the Sales Goods Act, 1930. 

History Of Auction Sales

The process or the tradition of the auction is as old as 500 B.C. It can significantly be remarked in Greece where the women were auctioned for marriage. Women were not allowed to marry if they did not pass this step of the procedure. As the highest bid was found equal or higher than the reserved price women were sold to that buyer. if the marriage did not persist or if the marriage dissolves the bidder was allowed to take back all the money paid. 

As the new economic policy, 1990 was introduced in India it brought many changes in the economy of the country as well as there was a tremendous growth of technology which opened the doors for many other goods to be auctioned like computers, mobile phones, printer machines etc. 

Sale of goods act, 1930

The Sale of Goods Act was brought into existence on 1st July 1930. Earlier this act was part of Indian Contract Act,1972 but in 1930 it was separated and was named ‘Sale of Goods Act,1930’ There are basically two types of property- movable property and immovable property. Sale of Goods Act, 1930 specifically deals with movable properties only. There is a separate law governing immovable property which is ‘The Transfer of Property Act, 1882’.

What all does the word “Goods” include in ‘The Sales of Goods Act’? 

The word goods include the following things as movable property –  

1. Growing Crops (which The Transfer of Property Act excludes)- Growing crops are the crops which are planted in bulk in the farms or in fields by the farmers. 
2. Standing Timber- The timber trees in which the timber can be cut off and sold.
3. Grass- The thin, green, dense plant which covers most areas of the earth.
4. Old currency- It is considered as movable property as it cannot be used to buy goods, it is treated as an antique item.
5. Water- The water in its natural form in sea, rivers, water streams etc.
6. Gas- Gas is considered as movable property as it expands freely to anywhere and everywhere.
7. Electricity- The electricity power generated to run the day to day usage of it in various sectors and parts of human life is considered as movable property. 
8. Trademark- Unique symbol or sign used to signify a particular brand, company.
9. Patent – It can be described as a license issued by the Government.
10. Copyright- It is a legal right of an individual which is given to protect the unique piece of artwork. 
11. Share of the Company- After allotment of the share of the company it is treated as the movable property.
12. Goodwill of the Company- A company’s reputation or image in the market is an added asset to the company which is also included under a movable property.
13. Stock- Stock of company which can be divided into shares are considered as movable property.

What are all excluded from the word “Goods” under the Sale of Goods Act?

1. Immovable property 
2. Actionable claim 
3. Money / Currency  

Classification of Goods 

Goods can be classified into ‘Existing Goods’ which are the goods existing at the time of contract of sale. Existing goods are further divided into three categories which are specific goods, unascertained goods and ascertained goods. Specific goods are the goods which cannot be replaced, unascertained goods are the goods which are in bulk and which cannot be specifically identified at the time of Contract of Sale, whereas ascertained goods are the goods which are easily separated from the bulk at the time of Contract of Sale. 

The other category of goods is ‘Future Goods’. These are the goods which are yet to be produced or manufactured. The seller manufacture certain goods like jewellery on the order of the buyer, such goods are known as future goods. The last category of the goods is ‘Contingent Goods’. These are the types of goods which may or may not be produced subject to certain conditions. The seller may deliver the goods if the conditions are fulfilled and if the condition is not fulfilled the seller may not deliver the goods.  

Statutory Provisions of Auction Sales under Sale of Goods Act, 1930 

The statutory provisions pertaining to auction sale are found in Sale of Goods Act, 1930. Section 64 of the Act provides rules regarding the auction sale. The rules are explained below.

1. When the goods are in lots and they are put up for auction sale, each of the categories or a lot of goods will be subjected to separate contract of sale.
2. The sale of goods in the auction is said to be complete only when the auctioneer declares it to be completed by fall of the hammer or any other usual method or by announcing. Until then the bidder can anytime drawback his bid. 
3. The seller at the auction can reserve his right to bid and he has to expressly reserve such right. He can appoint a person to bid on his behalf. 
4. If the seller does not expressly notify his right to bid, he cannot bid at the auction nor can he appoint anyone on his behalf to bid at the auction. Also the auctioneer should not accept and entertain such bids. Any sale which is done in contradiction to this rule is unlawful and will be declared as fraudulent by the buyer. 
5. The reserve price once declared the auctioneer cannot sell the subjected goods in price below the reserve price. 
6. In any case, if the seller or his agent purposely and knowingly pretend to bid to raise the price of the goods then such sale is voidable at the option of the buyer
7. The property in the auction cannot be sold on credit and as per the wish of the auctioneer. 

Essentials of Valid Sale or Contract Of Sale

1. All essential elements of a valid contract are to be fulfilled. The essential elements of contract consist of offer and acceptance, intention to create a legal relationship, lawful consideration, the capacity of parties to contract, free consent, lawful object, certainty and the possibility of performance, legal formalities, should not be expressly declared void. 
2. When a contract of sale is concerned there must be two parties that is the buyer who is a potential buyer and is interested in buying the property in the auction and the seller who is ready to sell the property and ready to transfer its ownership to the other. 
3. The movable property should be there for sale. As this Act deals only with a movable property only.
4. There must be an agreement created between the buyer and the seller for the transfer of the ownership of the property from the buyer to a seller. 
5. Section 2(10) of the Sale of Goods Act says that there must be some consideration for the sale of the goods. 

CASE LAWS

• COFFEE BOARD V. FAMOUS COFFEE AND TEA WORKS 

In this case under the Madras High court, the seller expressly declared that he can accept any bid be it the highest bid or the lowest bid whichever he likes or whichever he believes to be a fair price to the property. This will be completely his decision and he is not bound by the highest bid. He is also not bound to give any reasons for his decision and his decision shall be final and conclusive. 

• MCMANUS V. FORTESCUE 

In this case, the auctioneer mistakenly sold the said property below the reserved price which was stated in a catalogue for each lot because of which the seller refused to sign the memorandum of sale. The court relieved the auctioneer as it was done mistakenly. 

• BOMBAY SALT AND CHEMICAL V. JOHNSON & ORS. 

In this case, it was held that the highest bidder can claim his rights over the property in the auction sale only when the auction sale is accepted by the seller and has been approved by the seller and also the sale deed is executed in his favour. Until then the highest bidder has no rights over the property. 

• BARRY V. DAVIS 

In this case, it was stated that if there exists no reserve price for the property that has to be sold or to be put in the auction then the property should be sold to the genuine highest bidder. There are also certain exceptions to this such as unlawful selling of goods, seller not authorised to sell, the buyer has no right to buy or the buyer does not have enough money to buy the property. 

• PAYNE V. CAVE 

In this case, Mr Cave was the buyer and he made the highest bid for a good at the auction. Later Mr Cave decided to not to buy the property and withdrew his bid before the auctioneer put down the hammer. It was held that as the Mr. Cave has withdrawn his bid before the auction was completed and he had all the rights to withdraw his bid anytime before the auction is declared to be complete. He is not liable to purchase the goods. 

• HARRIS V. NICKERSON 

In this case, an advertisement was given in the newspaper that certain items are to be sold and would be auctioned on a particular place for three days. The plaintiff wanted to buy certain goods but the goods were withdrawn. The plaintiff sued the defendant for the loss of time and travel expenses. The court held that advertisement for auction does not amount to offer and therefore the advertiser can withdraw goods anytime prior to the auction. 

ILLUSTRATIONS 

1. A being the auctioneer in the auction sale. A accepted the highest bid by B. A declared that the auction is complete. Later B decides not to buy the property at Auction sale to which he agreed to buy. B cannot deny buying the property and he will have to pay the consideration to A. 
2. A held the auction of a House. B made the highest Bid. But before the hammer was slammed down by the auctioneer the seller decides to withdraw the property. B cannot enforce the selling of the property to him. 
3. A was the auctioneer in the auction sale. A sold the property at the price below the reserve price to B. The seller denied selling his property. B cannot claim the property from the seller. 

Conclusion

The auction sale is covered under Section 64 of ‘The Sales of Goods Act, 1930’. The Sales of Goods Act specifically deals with a movable property only. Auction sale can be defined as a public sale in which various prospective buyers are invited to a particular area where the auction is to be conducted. There are two main parties involved one is the auctioneer who conducts the auction of a property and the other is the buyer who will bid the highest than any other buyer in the auction.

The auction is complete only when the hammer is dropped down or in a customary manner, the auction is declared to be complete. The ownership of the property thus passes from the owner to the highest bidder on the fall of the hammer. The seller himself cannot bid and he also cannot appoint anyone to bid on his behalf.

The auctioneer can be the seller or his agent. Auctioneer should always be an authorised person and should act in the benefit of the seller with a bonafide intention. The bidder can revoke his bid anytime before the completion of the auction. A bid can be said to an offer and to which acceptance is completed only when the sale deed has been executed in the name of the highest bidder.  

References

1. “http://indiankanoon.org/doc/547058/
2. https://www.toppr.com/guides/business-laws/the-sale-of-goods-act-1930/auction-sale/ 
3. https://www.legalcrystal.com/cases/search/name:sale-of-goods-act-1930-section-64-auction-sale 
4. https://www.lawteacher.net/free-law-essays/contract-law/the-sale-of-goods-act-1930-contract-law-essay.php

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

The post Auction Sale under the Sale of Goods Act, 1930    appeared first on iPleaders.

This article has been written by Deyasini Chakrabarti from KIIT Law of School, Odisha. This article talks mostly about two basic concepts of sale and agreement to sell, various statutory provisions that are related to it and also about their difference.

Introduction 

The basis of Indian society is a contract. The very foundation of Indian society was based on the Social Contract Theory. Thus, contracts are the roots of the law which deals with business, transactions of the Indian economy as well as the society. The mother law being the Indian Contract Act 1872, we had derived the Sale of Goods Act 1930. Thus it helps to enhance, encourage and promote business transactions where the seller transfers or agrees to transfer the title in the goods to the buyer for consideration.

Statutory Provision that draws the difference between  Sale & Agreement To Sell

One of the foundation concepts in the Sale of Goods Act 1930, is the sale and an agreement to sell. Section 4 of the Sale of Goods Act 1930 specifically deals with sale and agreement to sell. It explicitly manages and deals with sale and agreement to sell. 

It expresses that: 

• Firstly, an agreement to sell products is an agreement whereby the merchant moves or consents to move the property in merchandise to the purchaser at a cost. There might be an agreement of offer between one section proprietor and another. 
• Secondly, an agreement to sell might be total or restrictive. 
• Thirdly, where under an agreement to sell the property in the merchandise is moved from the seller to the buyer, the agreement is known as a sale, yet where the exchange of the property in the products is to happen at a future time or subject to some condition from that point to be satisfied, the agreement is called an agreement to sell. 
• Lastly, an agreement to sell turns into a sale when the time slips by or the conditions are satisfied depending upon which the property in the merchandise is to be moved.

Essentials of Contract of Sale

The essential of the contract of sale are as follows:

1.     There ought to be at least two parties.
2.     The basis of the contract ought to be products. 
3.     Price.
4.     Transfer of Property in Goods.
5.     Absolute or Conditional.
6.     All other essential constituents of a valid contract.

Sale: Concept And Definition

Section 4(1) defines sale as a contract whereby, the seller transfers or agrees to transfer the property in goods to the buyer for a price. Thus, it happens in the present. Such an event of sale is fixed, conditional and binding upon both the parties. A contract of sale is made by an idea to purchase or sell merchandise at a cost and the affirmation of such an offer.

The agreement may oblige the speedy movement of the product or prompt instalment of the cost or both, or for the transport or instalment by portions, or that the transport or instalment or both will be delayed. It is further being subjected to the arrangements of any law until further notice in power, a contract of sale might be made or recorded in writing or by word of mouth, or partly in writing or partly orally or can be implied from the conduct of the parties. Thus the process of forming a contract of sale had been explained in section 5 of the concerned Act.

The existing goods mostly from the subject of the contract of sale. However,  the goods could also be owned or possessed by the seller or future goods.

Agreement to Sell 

An agreement to sell can be defined as the transfer of property in goods that is to take place in future time or the transfer might take place depending on the fulfilment of certain conditions.  The same had been defined in section 4(3). An agreement to sell also becomes a sale when the given time elapses or the conditions that are needed for the transfer to happen gets fulfilled. Thus, an agreement to sell establishes the terms and conditions of the offer of a property by the seller to the buyer.

These terms and conditions incorporate the sum at which it is to be sold and the future date of payment. The concept of contingent contract as per section 31 of the Indian Contract Act 1872, can also be brought into it. Thus an agreement to sell is a contract, to do or not to do something if some event collateral to such contract, does or does not happen.

All the terms and conditions remembered for the understanding of sale must be done all together by both the parties and obeyed all through the deal procedure until the time the sale deed is made or completed. Thus, an agreement to sell is a basic document on which the sale deed is drafted. In other words, agreement to sell can be called a confirmation of the future event which may take place depending on the fulfilment of the terms and conditions placed forth in the present.

Difference Between Sale And Agreement To Sell

As already described above, the sale takes place immediately, while an agreement to sell takes place in the future depending upon the fulfilment of certain terms and conditions. Thus at the time of the sale, an actual transfer takes place whereas at the time of the agreement to sell future transfer takes place. Risks are transferred immediately in sale whereas in the agreement of sale risks are attached to the seller till the goods are being transferred in the future. The sale is an executed contract whereas agreement to sell is an executory contract.

As per section 6(1) the sale deed mostly comprises of the existing goods owned or possessed by the seller or future goods. Whereas in the agreement to sell, the seller indicates to impact a present offer of future merchandise, thus it entirely depends upon the contingency of the event which may or may not happen.

However, section 8 of the said act, deals with the goods perishing before the sale but after the agreement to sell, thus this section again highlights the goods which damage or perishes without any fault of the seller or the buyer. Thus this also happens to be an instance of an agreement to sell.

Further, section 9 deals with the ascertainment of the price of the goods. Hence, when a sale is made, immediately a transfer takes place, and therefore the price is certain and fixed, whereas in specific conditions the price is determined, depending upon the circumstances of a certain particular case, thus an agreement to sell is completed but the sale is not.

Therefore the price of the goods itself falls and thereby the risk being attached to the seller, he suffers the loss. However, if the goods or a part thereof is delivered and appropriated by the buyer, the buyer is bound to pay a reasonable price to the seller. Thus it could be concluded that one is an instant action while other is a future action.

In the sale and agreement to sell the condition and warranty as being defined under section 12 of the act which also plays an important role. Section 12(2), defines the condition as a stipulation essential to the main purpose of the contract. While section 12 (3) defines warranty as stipulation collateral to the main purpose of the contract and a breach of it may give rise to claim for damages but not to right to reject the goods and to treat the contract as denied.

Thus the term “condition” could be related more to the immediate sale, whereas the term “warranty” could be more associated with the agreement to sell. Subsequently, we also find that section 13 of the said act is also inclined towards the agreement to sell as it states that when a condition could be treated as a warranty.

When an immediate sale happens, all the rights which are attached to the goods to the seller are impliedly transferred immediately to the buyer, whereas, in the agreement to sell, this is not the case. In certain cases the sale also happens as per the descriptions hence it is applicable to both to sale and agreement to sell as per section 15 of the Sale of Goods Act, 1930.

Chart Showing The Differences Between Sale And Agreement To Sell

Case Analysis

In the case of Cehave N.V. v. Bremer Handelsgesellschaft mbH; the Hansa Nord ( 1976) Q.B.44, the facts stated that a written contract to sell fruit pellets contained the express stipulation, “ shipment to be made in good condition.” In fact, some of the pellets were not in good condition when shipped. However, they were, on arrival, still fit to be used for the purpose the buyer intended and although they were worth less than they should have been, they could have been re-sold at a reduced cost.

The question of law which arose:

1. Firstly was whether there is a breach of the condition?
2. Secondly, whether the buyer is entitled to repudiate the contract and reject the goods?

Thus it was held in this case there was no breach of condition and the buyer was not entitled to repudiate the contract and to reject the goods. But the buyer is entitled to the damages.

The reasoning behind the judgment was the seller was not in breach of the implied conditions as to the fitness and merchantable quality. The express stipulation in the contract was not a condition and the seller’s breach of it had not been serious enough to go to the root of the contract. Therefore the buyer is entitled only to the damages.

Similarly in the case of Rowland v. Divall (1923) 2 K.B. 500., the facts stated that Rowland bought a motor vehicle from Divall and used it for four months. Divall had no title to the car, and consequently, Rowland had to surrender it to the true owner. Rowland sued to recover the total purchase price that he had paid to Divall.

Thus the main question of law,

1. Firstly was whether there was a breach of the condition? 
2. Secondly, whether the buyer is entitled to recover the total purchase price.

However, it was held in this case that there is a breach of the implied condition as to the title on which the sale and agreement to sell were based. Therefore the buyer is entitled to recover the purchase price in full, notwithstanding that he had used the car for four months. The rationale behind the judgment was the consideration on the part of the seller had totally failed as there was a breach of condition.

Thus, the use of the car that he had, was no part of the consideration, that he had contracted for, which was the property in and lawful possession of the car, whereas what he got was an unlawful possession which exposed him to the risk of an action at the suit of the true owner.

Conclusion

Sale and Agreement to sell, as effectively expressed, appears to be under a similar nonexclusive name yet at the same time it is to be treated under various classifications. Along these lines so as to set up a deal there must be an understanding communicated or inferred relating to the idea of items and satisfaction of the condition would result in going off the title in the very products contracted to be sold. These two ideas of offer and consent to deal is itself a powerful idea.

It doesn’t limit itself to the Indian Contract Act 1872 and Sale of Goods Act, 1930, just, however, it additionally extends to Transfer of Property Act 1882 and Motor Vehicles Act 1988 also. Anyway so as to comprise a substantial agreement to sell under this Act, there must be consistent and persuading proof regarding understanding between the able competent parties, the cost for the products and the passing of the properties of the products. Consequently without the genuine exchange of possession in the merchandise, by the seller to the buyer, there can be no deal by any stretch of the imagination.

Reference

1. http://comtax.up.nic.in/Miscellaneous%20Act/the-sale-of-goods-act-1930.pdf,
2. https://keydifferences.com/difference-between-sale-and-agreement-to-sell.html.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

The post Sale and Agreement to Sell: An Analysis of Statutory Provisions appeared first on iPleaders.

The article is written by Sneha Mahawar, a student of Ramaiah Institute of Legal Studies. The article discusses the concept of Investor Education and Protection Fund and how it is created under Company Law.

What is a company?

To understand legally, a company is an entity having legal personality, and thus is able to own property and to sue and be sued in its own name. It has no definite meaning in legal sense. In a general sense it is a team, a group of people who work together professionally for achieving a particular objective. Section 2(20) of the Companies Act, 2013, defines the term ‘Company’.

What is IEPF?

Investor Education and Protection Fund or IEPF was initially a fund set up under the Section 205C of the Companies Act, 1956. Now it is set up under Section 125 of the Companies Act, 2013. 

It is a fund set up to pool in all the dividends of the Asset Management Companies, matured deposits, share application interests or money, debentures, interests, etc. that are unclaimed for seven years. All the money collected from these sources has to be transferred to IEPF. Investors, who are trying to seek a refund for their unclaimed rewards can now do so from the Investor Protection and Education Fund (IEPF). The fund has been set up under the guidance of SEBI and the Ministry of Corporate Affairs India (MCA).

Why was IEPF introduced?

IEPF concept was introduced initially with the idea of using the investor’s money for their benefits such as investor’s education, investor’s awareness programme. Later in 2016, the government made it mandatory the transfer of underlying shares on which dividends had not been claimed for the last seven consecutive years. This gave rise to ambiguities with respect to the process of transferring the same to the government and certain other confusions among all the stakeholders. Therefore, this was amended by the MCA several times including the recent amendment, dated 14th August, 2019 through which the process has been simplified.

Section 125 of the Companies Act, 2013

This Act states that:

Sub-section(1), the central government of India shall make a fund called the Investor Education and Protection Fund. (Here, the word ‘fund’ means IEPF)

Sub-section(2)

(a) The Central Government by way of grants for being utilised for the purposes of the fund (IEPF) provides a certain amount by the law which should be credited to the IEPF;

(b) There are various institutions and government bodies which provide donations to credit the IEPF;

(c) According to Sub-section(5) of section 124 of the Companies Act,2013 the fund ie, the IEPF shall be credited by the amount of money kept in the unpaid or unclaimed dividend account of that company;

(d) According to Sub-section(5) of section 205A of the Companies Act, 1956 the fund which is the IEPF shall be added by the amount of money in the general revenue account of the central government;

(e) According to section 205C of the Companies Act, 1956 section 205C is the Act which governed IEPF in 1956 until 2013 when new Act came into existence) the fund should be added by the amount in the IEPF; 

f) The fund should be credited by the interest or other income received out of the investments which is the amount of money invested by number of individuals in a particular company;

g) Under sub-section (4) of section 38 of the Companies Act, 2013; the fund should be credited by the amount received; 

(h) The money received by the companies through application for allotment of any securities, the fund should be credited by that amount;

(i) The fund should be credited by companies having matured deposits other than banking companies;

(j) The fund should be credited by companies having matured debentures;

(k) IEPF should be added by the interest earned or incurred by the money received by the companies through application for allotment of securities, matured deposits and matured debentures;

(l) IEPF shall be added by sale proceeds of shares on issue of bonus shares, merger and consolidation for consecutive seven or more; and

(m) IEPF shall be added by recovered preference shares which are unpaid or unclaimed for seven or more than consecutive seven years or more; and(n) The fund should be credited by such other amounts as may be prescribed.

The clauses (h) to (j) shall only form the part of IEPF if such amount remains unclaimed and unpaid for seven consecutive years from the due date.

Sub-section(3) 

1. The IEPF money shall be used for the the dividend which is unclaimed, the deposits and debentures which have matured and the application money which is due for refund;
2. The IEPF money shall be used for a person who invests in a company. This fund id for that individual’s education, awareness and protection;
3. The IEPF money is used for distribution of it among people who hold a company’s shares, debentures,etc and have suffered losses and court has ordered to pay them damages;
4. The IEPF money shall be used for reimbursement of legal expenses for company members and debenture holders; and
5. The fund can be used for any other purpose if such rules are prescribed.

Sub-section(5), states that the chief executive officer of the fund is appointed by the central government and IEPF also consists of a chairperson and maximum of seven members.

Sub-section(6), states that the conducting of meetings and appointing various authorities shall be in compliance with the rules.

Sub-section(7), states that the offices, and other required resources such as employees, officers will be provided by the Central Government as per the rules.

Sub-section(8), provides that separate accounts shall be maintained after consulting Comptroller and Auditor-General of India.

Sub-section(9), provides that the authorities shall be using the fund for the the dividend which is unclaimed, the deposits and debentures which have matured and the application money which is due for refund. This fund id for that individual’s education, awareness and protection;The fund is used for distribution of it among people who hold a company’s shares, debentures,etc and have suffered losses and court has ordered to pay them damages; The IEPF money shall be used for reimbursement of legal expenses for company members and debenture holders.

Sub-section(10) states that the fund shall be audited by specified authorities at regular intervals as prescribed and be submitted to the Central Government on an annual basis.

Sub-section(11) states that the specified authorities shall prepare annual reports of each financial year providing with full account of the activities taking place and forward a copy of it to the Central Government.

How is IEPF created under company law?

Step 1: Dividend Declaration (AGM)

A dividend is declared by the company in the Annual General Meeting (AGM). Post the declaration of dividend in the AJM the company is required to file e-FormIEPF-2 along with a statement or information of unclaimed and unpaid dividend within 60 days of the AGM. These statements are to be separately filed for each of the previous seven financial years.

Step 2: Dividend payment to shareholders

The dividend declared by the company has to be transferred to the separate dividend bank account of the company within 5 days of AGM and then the dividend needs to be remitted or paid to the shareholders within 30 days from the date of the AJM. At this point, the company needs to file e-FormIEPF-7 in order to report that the dividend that has been directly remitted to PNB account of the IEPF authority on the shares which have already been transferred to IEPF in compliance of rule6 sub rule12 of the IEPF authority rules 2016. It means the payment of the dividend on those shares which the company has already transferred to the IEPF in the previous financial years.

Step 3: Transfer to unpaid dividend account

Further, the dividend remained unpaid and unclaimed is required to be transferred to a separate unpaid dividend account within 7 days. The date on which the unclaimed dividend is transferred would become the base date for calculating the due date or cut-off date for transferring the unclaimed dividend and underlying shares to IEPF in future.

Step 4: Due date

This step deals with due date calculation for transferring to IEPF. The company to calculate 7 years from the date when the company has transferred the unclaimed dividend to unpaid dividend account as explained in step 3. The date we get after adding 7 years would be the due date or cut-off date for transferring unclaimed dividend and underlying shares. This is in compliance with section 124 of the Companies Act, 2103 read with rule 6 of IEPF authority rules 2016 as amended. The company shall inform the latest available address of the concerned shareholder regarding transfer of shares at least 3 months before that due date of transfer of shares. The company is also required to simultaneously publish a notice in a leading newspaper in English and regional language having wide circulation informing the concerned shareholders to claim unpaid dividend failing which the unclaimed dividend and underlying shares would be transferred to IEPF. The notice also notifies about the availability of the details of such shares along with the folio number or DP ID, client ID are available on the company’s website, mentioning the website address.

Step 5: Transfer of unclaimed dividend and underlying shares to IEPF

The transfer needs to be made within 30 days thereof. There are slightly different processes for transferring unclaimed dividend and underlying shares.

For unclaimed dividend, the company needs to file e-FormIEPF-1 on MCA portal along with uploading and confirming the excel sheets containing the list of shareholders whose dividend is to be transferred. The e-FormIEPF-1 to contain the amount of unclaimed dividend in the unpaid dividend account as on that due date then from the pay miscellaneous section on MCA portal that dividend is required to be remitted to the IEPF authority PNB account.

For underlying shares, firstly the corporation is required to be executed by both the depositories NSDL and CDSL for transferring the underlying shares as on the due date to the IPF authority D-mat account as per the documents shared by the company. Then afterwards, e-FormIPF-4 is required to be uploaded on MCA portal and the excel sheets detailing the list of shareholders whose shares have been transferred to be uploaded and confirmed on IEPF portal.

Step 6: Financial year-end 

Lastly, at the end of the financial year the company is required to report the shares being eligible for transfers but has not been transferred to IEPF due to any specific order of court or tribunal or statutory authority or due to the shares be pledged or hypothecated restraining such transfer of shares and payment of dividend. This report is to be made in e-FormIEPF-3.

Objectives of IEPF

• To educate the investors about how the market operates.
• Making investors educated enough so that they can analyse and make informed decisions.
• To educate investors about the dynamism of the markets.
• Making investors realise their rights and various laws about investing.
• Promoting research and surveys to spread knowledge among investors.

Changes in IEPF provisions by recent amendments

• A new concept of e-Form IEPF-1 has been introduced for reporting dividends already transferred but reporting not made till notification of IEPF authorities.
• e-Form IEPF-2 is required to be filed to for updating nodal officer details till September 4 for the first time and thereafter within 7 days of any change in nodal officer along with the board resolution.
• e-Form IEPF-5 is the form through which the shareholders can claim refund of their shares and dividend of IPF authority with the help of nodal authorities.

Conclusion 

Hence, Investor Education and Protection Fund (IEPF) is a fund set up to accumulate all kinds of dividends, matured deposits, share applications, debentures and interest which are unclaimed for seven years to benefit the investors for their education and awareness. Initially only clause(3) and clause(11) of section 125 of the Companies Act, 2013 was notified but with due course of time, all its clauses were notified by the government.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

The post What is IEPF and how is it created under company law? appeared first on iPleaders.

This article is written by Arijit Mishra, from KIIT School of Law, Odisha. This article talks about the State Recognition. A new State can enjoy its rights, privileges, and obligations when it will be recognized as a state.

Introduction

A new state is born out from an existing State or an old State which disappeared and comes with a new name or by splitting an existing State into two States. If a new state enjoys certain rights, privileges and obligations then it must get recognition as a state, which is very essential. However, there are some minimum criteria required before a State is considered to be a State. A State must get the De Jure (when a state is legally recognized) recognition for considering a State as a sovereign State. Political thought plays an important role in this decision whether to grant recognition or not. For recognition as a State, it must enter into relations with the other existing States. The elements, theories, and processes are reflected in this article.

Recognition of a State

Under International Law, recognition of a State can be defined as:

A state acknowledgment or acceptance as an international personality by the existing State of the international community. The declaration to fulfill certain essential conditions of Statehood as required by International Law.

Essentials of Recognition of a State

• Population;
• Territory;
• Government;
• Sovereignty;
• Control should tend towards permanency.

If these conditions are fulfilled, then the State can be recognized.

Kelson’s view on the recognition of states

For a state to be recognized the following conditions must be fulfilled-

• Must be politically organised.
• Have control over definite territory.
• Must be permanent.
• Must be independent.

Process of Recognition

• State is not only an institution with international legal standing but they are the primary subjects of International Law and possess the greatest range of rights and obligations.
• Mixture of fact and law and the establishment of particular factual conditions and compliance with relevant rules are the process of creating new States.
• States are not bound to recognise new claimants of Statehood and make it a positive duty to recognize a State.
• Recognition is mainly a matter of intention. 

Israel-Palestine Dispute

In this dispute, India did not recognize Israel till 1999 and also South Africa till 1991 due to racism. Even though India got military support from Israel, still it didn’t recognise Israel. Where both the countries had all the parameters under Montevideo Convention.

But Palestine got limited recognition by countries because they had large number of Zewish population.

China-Taiwan Dispute

In this dispute, 15 countries recognised Taiwan as a state all over the world. Taiwan was officially known as the Republic of China and is recognised by 19 member states of the UN. Other countries have business relations with Taiwan but they don’t recognise it as a state. Taiwan unofficially maintains diplomatic relations with 57 other members of the UN.

Political Recognition of State

• Political act in recognition is used to support or to reject a state or a government which is new in an international community. 
• Mixture of fact and law and the establishment of particular factual conditions and compliance with relevant rules are the process of creating new States.
• Criteria of Statehood is laid down in the Montevideo Convention, which provides that State must have a permanent population, a defined territory and a government and the capacity to conduct International relations.
• Recognition of State is a political act based on interest and assessment made by States individually, but legal arguments are important. 

Montevideo Convention

To consider a State as an international person, State should adhere to following qualifications-

• Permanent Population;
• Definite Territory;
• Government;
• Capacity to enter into relations with other States.

Theories of Recognition

There are two theories of recognition-

• Constructive Theory,
• Declarative Theory.

Constructive Theory of Recognition

• This theory is coined by Hegel and Oppemheim.
• According to this theory, the State is considered as an international person. This theory views that after the recognition a State gets its status of an International person and becomes a subject to International Law.
• This doesn’t mean that State doesn’t exist unless recognised, but in this theory State gets the exclusive rights and obligations and becomes a subject to International Law after its recognition by other existing States.

Criticism

This theory is criticized by many of the jurists, few of them are-

• That except the State which is recognised by other existing States, rights, duties, and obligations of Statehood community under International Law is not applicable to this theory.
• It also comes into confusion when a new State is recognised by some of the existing States and not recognised by other States.

Oppenheim’s View on Recognition of State

• A State is and will only be an international person if recognised as extraordinary. There is no agreement that countries have to give recognition to a State, there is no obligation on the countries, obligation lies under international law who will give recognition to a new State.
• Existing countries recognised a country as a member of the international community and believe that the State meets the requirements of international law outside the country.

Declarative Theory of Recognition

• Declarative Theory is coined by Hall Wagner and Fisher.
• This was developed in the 20th Century to address shortcomings of constitutive theory.
• Before the recognition of the State, a new State has the right to defend its integrity and independence under International Law.
• This theory is laid down under Article 3 of Montevideo Conference of 1933
• Followers of this theory consider this process of recognition as merely a formal existence of Statehood by other States

Criticism

This theory has also been criticized. It is criticized on the grounds that this theory cannot be applicable for recognition of the State.

When the essential characteristics are fulfilled by a State then it comes into existence. If international rights and obligations are exercised by the State then declarative theory applies. But when the State gets the legal rights of recognition then constructive theory applies.

Modes of Recognition

Recognition of a new State

Recognition specifies the willingness of recognizing State. Existing State is a member of the International Community who will deal with a new State.Under International law it allows the recognized State to exercise the rights and duties of the State. Recognition of the Government automatically involved in recognition of a new State.

Recognition of a new government

Through the medium of the government a State participates in the benefits of International Law largely. To recognise the government, recognising the State is important.

Objective Test

• Is there any opposition or not?
• Whether the new government has effective territory?

Subjective Test

• Whether fulfilled the International Obligations?

Recognition of belligerency

Belligerency exists when a portion of the States territory and population is under the de facto control of the people who are fighting against the government to establish a separate State or to overthrow the existing government.

A civil war may turn into a real war if the rebels are in possession of a substantial part of territory.

Recognition of belligerency was granted during most of the civil wars of the 19th Century, such as the American civil war and war during the Independence of the Twentieth Century. 

Forms of Recognition

De Facto Recognition

• De Facto Recognition is mostly granted to governments.
• It is a temporary recognition of a State, this can be conditional or without any condition.
• This mode of recognition is granted when a new State holds a sufficient territory or control over a particular territory, but the other existing State consider that when they don’t have enough stability or any other unsettlement issues. So we can take it as a test of control for newly formed States.
• The UK first recognized Soviet Government as de-facto recognition in 1921 and later recognised as de-jure in 1924.

De Jure Recognition

• De Jure Recognition is given to a new State when a new State fulfills all the essential characteristics of a State.
• De Jure recognition can directly be granted to a State who has or has not granted de-facto recognition.
• Newborn States grant the permanent status as a sovereign State through de-jure mode of recognition.

Difference between De Facto and De Jure Recognition

Express Recognition

• When an existing State identifies a new State expressly by official declaration or notification, then it is considered to be a expressed form of recognition.
• Express recognition can be expressed through formal means such as sending or publishing declaration or statement to the opposite party. 
• It can also be expressed through personal messages from the head of State or from the minister of foreign affairs.

Implied Recognition

• When an existing State identifies a new State through any implied act then it is considered as implied recognition. There is no formal statement or declaration issued. 
• The recognition through implied means may vary from case to case. The actions required for implied recognition must be ambiguous and there shouldn’t be any doubt in the intention of the State who recognises a new State. 

Conditional Recognition

• Some conditions are attached to the recognition of the State to obtain status as a sovereign State. The conditions attached may vary from State to State such as religious freedoms, the rule of law, democracy, human rights etc.
• The recognition of any State which is already associated with the essential conditions are needed to be fulfilled for the status of sovereign State, but when any additional condition is attached then it is Conditional Recognition.
• Jurists criticise conditional recognition. It was criticized on the ground that recognition is a legal procedure and nothing additional condition can be attached unless the conditions are recognised by law.

Withdrawal of Recognition

Withdrawal of De Facto Recognition

• Under International Law, when a State having De Facto recognition but fails to obtain or fulfill the essential conditions then the recognition can be withdrawn.
• The recognition can be withdrawn through declaration or through communicating with the authorities of the recognised State. It can also be withdrawn by issuing a public Statement.

Withdrawal of De Jure Recognition

• Withdrawal of De Jure recognition is a debatable topic under International Law. Withdrawal of this recognition comes under as an exception.
• This recognition can be withdrawn when a State loses the essentials elements or other circumstances.

Conclusion

The recognition of the State is an essential procedure, so that the State can enjoy the rights and privileges as an independent community under International law. The recognition be it De Facto and De Jure, both provides rights, privileges and obligations.

When a state gets De Facto recognition, its right, privileges and obligations are less but when De Jure is recognised by the State it gets absolute rights, liabilities and privileges. The recognition of the State has some political influence on the International Platform.

There are many situations where powerful States create difficulties in recognition of a newly formed State. This can be withdrawn when any State does not fulfill the conditions for being a sovereign State. De Jure and De Facto recognition may vary from case to case. De Jure recognition can be given directly to the State, there is no necessity of De Facto recognition even if De Facto is considered as the primary step to achieve De Jure recognition. 

References

1. https://www.legalbites.in/recognition-State-implication-modes-necessity/
2. http://www.preservearticles.com/political-science/what-are-the-important-elements-of-the-State/12783
3. https://studybix.com/State-recognition/
4. https://www.lawteacher.net/free-law-essays/international-law/recognition-important-issues-in-international-law.php
5. https://www.jus.uio.no/english/services/library/treaties/01/1-02/rights-duties-states.xml

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

The post State Recognition under International Law appeared first on iPleaders.

This article has been written by Neha Mallik, from the Vivekananda Institute of Professional Studies, New Delhi. This article highlights the important terms in the definition clause of the Sale of Goods Act, 1930.

Introduction

The sale or purchase of goods is the most recurring transaction in almost every kind of business. Every now and then, businessmen get involved in the sale & purchase of goods and enter into the contract of sale. These contracts are governed by the Sale of Goods Act,1930.  It is important for every individual, be it a legal professional or a common man who deals in the transaction of sales on a regular basis, to have an understanding of the important terms in the Sale of Goods Act,1930. In this article, we will discuss some common yet important terms in the Sale of Goods Act,1930. Give a quick reading to this article to have comprehension about the terms related sale of goods.

Important Terms: Sale of Goods Act, 1930

Buyer and Seller

• Buyer [Section 2(1)]

The definition of the ‘buyer’ is stated under Section 2(1) of the Act. It defines Buyer as a person who either buys or agrees to buy certain commodities. In the contract of sale, the Buyer is one of the parties to the contract.

• Seller [Section 2(13)]

On the contrary, the Act defines ‘seller’ as a person who either sells or agrees to sell particular commodities under Section 2(13). The Seller becomes the other party to the contract. The existence of both the parties i.e. the Buyer and the Seller must be there to enter into a contract of sale. 

The conjoint reading of the above two sections give us a conclusion that to be recognized as a Buyer or Seller under the Act, it is not necessary to actually transfer the goods. Even if you agree or promise to buy or sell the goods you would be considered and identified as a Buyer or Seller as per the Act.

Goods [Section 2(7)]

The dictionary meaning of the term goods is merchandise or possession. The term “Goods” is one of the crucial clauses in the Contract of Sale. 

According to Section 2(7) of the Act, “goods” include-

• Any movable property except actionable claims and money;
• Stock and shares;
• The growing crops, standing timber, grass;
• The things that are attached or forming part of the land which is agreed to be severed from the land before the sale. It has been held in the  State of Maharashtra v. Champalal Kishanlal Mohta that things which are attached to land are the subject matter of the contract of sale if they are severed before the sale. 

For eg: A resort was offering stay along with food at a consolidated charge. If customers do not take food, the rebate on food is not allowed as the supply of food does not come under the definition of “goods” as per the Act. 

It is concluded from the above definition that the Act deals with the sale of goods i.e. movable property only. On the other hand sale of immovable property is governed by the Transfer of Property Act,1882. It is noted that the actionable claims and money are excluded from the ambit of the definition. Actionable claims are the claim or debt for which legal action can be taken and can be enforced. For eg: recovery of refund is an actionable claim and is not included in the purview of the above definition. Further, the goods can be classified under several categories. Let’s see below.

Types of goods

The classification of goods in terms of business law can be quite ticklish to understand. Section 6 of the Act describes the types of goods. The goods are classified into existing goods, future goods, and contingent goods. Let’s study all three briefly. 

Existing Goods 

If the goods are physically present at the time of contract and are in the legal possession or owned by the seller during the formulation of the contract of sale is referred to as existing goods. The existing goods are further classified into:

• Specific Goods [Section 2(14)]: Referring to Section 2(14) of the Act, the goods that are specifically identified and agreed upon to be transferred at the time of the formation of the contract are called specific goods. 

Illustration- ‘A’ wants to sell his HP Laptop of a particular model number and advertises the same. ‘B’ agrees to purchase the laptop. Both entered into the contract of sale. Here the laptop is a specific good.

• Ascertained Goods: The Act does not define the ascertained goods but is conferred by judicial interpretation. The goods are said to be ascertained wherein some or whole part of goods is identified and set aside for the purpose of the contract. Such goods are specifically earmarked for sale.

• Unascertained Goods: The goods that have not been specifically identified to be sold are known as unascertained goods. For example, from 1000 quintals of wheat, the seller agreed to sell 500 quintals. Here the goods are not specified. The seller has the liberty to choose from the bulk. 

Future Goods [Section 2(6)]

The goods which are not in existence and to be manufactured or produced or acquired by the seller after entering into the contract of sales are considered as future goods. It must be noted that there can only be an agreement to sell contracts as there can be no actual sale in respect of future goods. This is defined under Section 2(6) of the Sale of Goods Act. 

Illustration – Amit is a manufacturer of chairs. Shyam ordered Amit to manufacture 200 units of chairs of specific design and they made an agreement for the same. This is the sale with respect to future goods. 

In the case of Union of India v. K.G. Khosla & Co. Ltd, goods were manufactured according to the specification mentioned in the contract. Therefore, the goods are “future goods” within the meaning of Section 2(6) of the Act. 

Contingent Goods [Section 6(2)]

According to Section 6(2), the sale of certain goods which depend upon happening or non-happening of certain events is termed as contingent goods. For instance, ‘A’ has agreed to sell ‘B’ certain goods at a particular date if the former receives the goods from the manufacturer before the said date. This agreement is based on contingencies, hence such goods are called contingent goods.

Delivery [Section 2(2)]

By delivery of goods we mean, the voluntary transfer of the possession of goods from one person to the other. The transfer of possession is the end result of the whole delivery process. It is not necessary that the person to whom the goods are delivered is a buyer, he can be any other person authorized by the buyer. The definition of the term delivery is defined under Section 2(2) of the Act. 

Kinds of Delivery

There are different forms of delivery of goods according to the Sale of Goods Act, 1930:

Actual Delivery 

Actual delivery takes place when the goods are physically handed over to the buyer or any person authorized by him. Say for example A, the seller of furniture handed over the ordered furniture to B, the case is of actual delivery of the goods. 

Constructive Delivery 

In the case of constructive delivery, the transfer of goods can be done without a change in the possession or custody of goods. Acknowledgment and attornment can be called constructive delivery. 

Constructive delivery can be effected in the following ways:

• Wherein the seller agrees to hold the sold goods as a bailee.
• Wherein the buyer who is in the actual possession of goods as a bailee of the seller holds the goods as his own after the sale.
• Where a third party like transporter or agent, agrees to hold the goods for the buyer. 

Symbolic Delivery 

Symbolic delivery is made wherein the goods are heavy and bulky and it is difficult to hand over the goods to the buyer physically. In this situation, the delivery is made by indicating or giving a symbol that the goods are under the possession of the buyer. For example, the delivery of the keys of the warehouse where the goods are kept is considered to be the symbolic delivery. A document like a bill of lading must be given to the buyer to make him entitled to hold the delivered goods. 

The document of the Title to Goods [Section 2(4)]

As per Section 2(4), we can confer that the Document of the title to goods includes a bill of lading, dock-warrant, warehouse keeper’s certificate, railway receipt, multimodal transport document, warrant or order for the delivery of goods. It also includes any other documents that are used in the usual course of business proving the possession or control of goods or which proves the authority of the possessor to transfer or receive the goods. The document is a very imperative document for taking any legal action without which one cannot proceed with the proceeding in the court.

Fault [Section 2(5)]

Any wrongful act or default committed is considered as “fault” under Section 2(5) of the Sale of Goods Act, 1930. 

Mercantile Agent [Section 2(9)]

As per the definition given under Section 2(9) of the Act, Mercantile Agent is a person who is having the authority in the customary course of business either to sell or consign the goods under the given contract. The Agent is authorized to act on behalf of the buyer or seller. An agent can also raise money on the security of the goods if authorized. The example includes agents, auctioneers, brokers, dealers, etc. 

Price [Section 2(10)]

According to Section 2(10) of the Act, The consideration for the sale of goods is called price. Price is the money that is paid or promised to be paid by the buyer or any person authorized by the buyer to the seller. Below  are the different modes by which price can be determined: 

• Parties mutually decide the price of the goods in the contract of sale. In Aluminium Industries Ltd. v. Minerals and Metals Trading, it is observed that the price prevailing on the date of delivery will be the price to be paid by the buyer. Subsequently, the seller issued a delivery note for the goods but without any valid reason delayed the delivery. The seller demanded an increased price which occurred due to delayed delivery. It was held that the seller was at fault thus he could not compel the buyer to pay an increased price. 
• It may be left to be fixed in the future.
• It may be determined in the course of dealing between the parties.

Property [Section 2(11)]

According to Section 2(11) of the Act, property generally means title or the ownership rights of the goods. In the process of a sale, there is a transfer of ownership or we can say the transfer of property from one party to the other. 

Quality of Goods [Section 2(12)]

Section 2(12) of the said Act gives the definition of “quality of goods”. The quality includes the state or condition in which the goods are expected or promised to be delivered. It is one of the important clauses to be included in the Contract of Sale. If the quality of the delivered goods has not complied with the contract then it is considered to be the breach of the Contract. 

Insolvent [Section 2(8)]

A person who ceases to pay his debts in the normal course of business, or is unable to pay even his due debts in the eyes of law is declared as insolvent. Section 2(8) states the definition of the term “insolvent”. The law gives certain rights and duties to an insolvent person. 

Conclusion

Through the course of the whole article, I have tried to throw light on the important terms of the definition clause of the Sale of Goods Act, 1930. The above discussion would surely help to make you understand the simple yet important terms in the Act. To conclude, it can be observed certain terms in this article lays down a paramount structure that is necessary to be incorporated in the contract of sale like a buyer, seller, mode of delivery, quality of goods, etc.  

Reference

1. Sale of Goods Act, 1930
2. https://www.toppr.com/guides/business-laws/the-sale-of-goods-act-1930/definitions-of-important-terms/
3. https://indiacode.nic.in/handle/123456789/2390?view_type=browse&sam_handle=123456789/1362
4. https://edurev.in/studytube/Introduction–Types-of-Goods-The-Sale-of-Goods-Act/c4eb32cb-14ac-415d-8338-ecf6af888dd8_t
5. https://indiankanoon.org/doc/1935273/
6. https://indiankanoon.org/doc/541801/

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

The post An understanding of the important terms in the definition clause of Sale of Goods Act, 1930 appeared first on iPleaders.

This article has been written by Chandan Kumar Pradhan from KIIT School of Law, Odisha. This article talks about the rights of an unpaid seller against the goods under the Sale of Goods Act, 1930.

Introduction

As per Section 2(f) of the Indian Contract Act, the seller must transfer the goods sold, and the buyer must pay the required amount in return, under the contract of sale by them. This is known as Reciprocal Promise. In other words, any set of promises made which forms the consideration or part of the consideration for each other are called reciprocal promises and every contract of sale of goods consists of reciprocal promises.

Three important rights of an unpaid seller against the goods

• Right of lien
• Right of stoppage of products in transit
• Right of resale

Rights of lien (Section 47)

“Lien” is the right to keep possession of products and refuse to give purchaser until the fee is paid by the purchaser. An unpaid seller, in possession of products, is entitled to work out his lien on the products within the following instances:

1. In which the goods were sold without any requirement as to credit score.
2. Where the goods were sold on credit however the term of credit has expired.
3. In which the buyer will become insolvent even though the period of credit began to expire.

In the case of the purchaser’s insolvency, the lien exists even though goods were offered on credit and the duration of credit has not expired till the time. When the products are offered on credit, the presumption is that the customer shall preserve his credit suitable.

If before payment the buyer turns insolvent, the seller is entitled to exceed his rights and hold the products as security for the charge.

The unpaid seller’s lien is a possessory lien, the lien may be exercised so long as the seller stays in ownership of the products. He may exercise his rights of lien but he is holding the ownership of the goods as agent for the customer [Section 47(2)].

Any property in the transfer of files, identify that the products which are not affecting these rights, supplied goods should stay inside the real possession of the seller. In truth, when a belonging has passed to the consumer then the most effective maintenance of products is technically known as “lien”.

In which the belonging goods have not exceeded the customer possession and the same remains with the seller, then it will be very difficult to maintain that the seller has a lien towards his own goods.

The seller’s lien when an asset has not exceeded the purchaser is called as a right of withholding shipping. For that reason, Section 46(2) states in which the belonging goods have not handed over to the customer, the unpaid seller has a right to withhold the transfer. 

The seller may additionally incur from storing the products inside the exercise of his lien for the charge. This right of lien extends to the entire product on his own despite the fact that the part price for the one’s items has already been made. In other phrases, the consumer is not entitled to claim delivery of a part of the products.

In addition, wherein an unpaid seller has made component shipping of the goods, he may also exercise his rights of lien on the rest, except such element shipping has been made under such instances as to reveal an agreement to waive the lien (Section 48). 

Also, the lien can be exercised even though the seller has received a ‘decree’ for the rate of the products.[Section 49(2)].

Click Here

When is lien lost?

As already discovered, lien relies upon physical ownership of products. As soon as the possession is misplaced, the lien is also misplaced. The unpaid dealer of goods loses his lien thereon inside the following instances:

1. When he provides the products to a carrier or other bailee for the motive of transmission to the customer without reserving the rights of possession of the products.
2. When the buyer lawfully obtains ownership of the goods.
3. When the seller expressly or impliedly waives his rights of lien. An implied waiver takes place while the seller offers a fresh time period of credit or allows the customer to just accept an invoice of trade payable at a particular date to a sub-sale which the purchaser may additionally have made.

Accordingly, when a refrigerator after being bought, will be delivered to the purchaser and if it no longer functions well, the buyer takes it again to the seller for repairs, here we can say that the seller could not exercise his lien over the fridge.

Rights of Stoppage of Goods in Transit

The right of stoppage in transit method is the right of stopping the transit of the goods even if they may be with a carrier for the cause of transmission to the buyer; resuming the ownership of the customer and retaining possession until they made the payment of the good.

Hence, this right is an extension of the right of lien because it entitles the seller to regain ownership even if the seller has parted with the possession of the products.

When can this right be exercised? (Section 50)

An unpaid seller can exercise this right in the simplest way when:

• The purchaser becomes insolvent

The buyer is said to be bankrupt when he has denied paying his debts inside the normal route of business, or if he cannot pay his money then it will be due. [Section 2(8)]

• The property has exceeded the buyer

If assets have not surpassed the buyer then this right is called the “right of withholding shipping”.[Section 46(2)]

• The products are within the route of transit

This means that goods should be neither with the seller nor with the buyer nor with their agent. The product has to be within the custody of a carrier as an intermediary. At that time, the carrier needs not to be either a seller’s agent or customer’s agent. Because, if he is the seller’s agent then the products are still in the arms of seller in the eye of regulation and consequently there may be no transit, and if he is the customer’s agent, the consumer gets transport in the attention of law and hence query of stoppage does now not rise up.

Duration of transit (Section 51)

Since the right of stoppage in transit can be exercised simply as long as the goods are inside the route of transit, it becomes important for the seller to recognize the transit route where it starts and where it comes to the destination. When the transit involves a stop, the right of stoppage can’t be exercised.

Items are deemed to be in course of transit from the time when they’re added to a service or other bailee for the motive of transmission to the buyer till the purchaser or his agent takes transport of them.

Thus, the transit continues as long as the products aren’t delivered to the customer or his agent, irrespective of whether or not they should be mandatory at the destination with the service expecting transmission or are in real transit.

When the transit is deemed to be at near the destination, then the seller can’t exercise his right of stoppage in the following instances:

1. When the customer or his agent takes shipping after the products have reached the destination.
2. When the buyer or his agent obtain delivery of the goods before their arrival at the appointed destination.
3. While the products have arrived at their destination and the seller acknowledges to the consumer or his agent that he holds the products on his behalf.
4. When the products have arrived at their destination then the customer in preference to shipping requests the seller to hold the products to some further destination then the seller agrees to take them to the new destination.
5. When the service wrongfully refuses to supply the goods to the consumer’s agent.
6. When some part of shipping of the goods has been made to the customer with the intention of handing over the whole of the products, transit can be at a quit for the rest of the products.

How is the right stoppage exercised? (Section 52)

The unpaid seller may additionally exercise his right of stoppage in transit both:

1. Through taking real possession of the goods.
2. By means of giving a declaration to the seller in whose possession the products are.

Such words can be given to the person in real ownership of the goods. Within the latter case, the word must accept well in advance to permit the superior to talk together with his agent or servant in time, for transport to the customer.

If with the addition of a mistake he offers the products to the purchaser, he may be responsible for the conversion. The fees of redelivered are to be tolerated by the seller.

Difference between the right of lien and right of stoppage in Transit?

The principal points of difference among these rights of an unpaid seller are as follows:

1. The seller’s lien attaches when the purchaser is in default, whether or not he is solvent or bankrupt. The right of stoppage in transit arises best while the customer is bankrupt.
2. Lien is to be held only when the goods are in actual possession of the seller at the same time as the right of stoppage is available, when the seller has half part with his own and the products are within the custody of an independent service.
3. The right of lien comes as soon as the seller has possession over the products to the carrier for the motive of transmission to the purchaser.

On the other hand, the right of stoppage in transit starts after the seller has introduced the goods to a carrier for the purposes of transmission to the buyer and maintains until the customer has acquired the ownership. The right of lien includes preserving the possession of the goods when the right of stoppage includes regaining ownership of the goods.

Right of resale

The right of resale is a completely valuable right given to an unpaid seller. Within the absence of this right, the unpaid seller’s other rights in opposition to the goods, specifically, “lien” and “stoppage” in transit could no longer have been used due to the fact, this rights only entitle the unpaid dealer to keep the products until paid with the aid of the buyer.

If the customer maintains to stay in default, should the predicted price maintained in order to retain the goods indefinitely, especially while the products are perishable?

Largely, this cannot be the aim of the regulation. Section 54, therefore, offers to the unpaid supplier a confined right to resell the goods inside the following lines:

1. In which the goods are of a perishable nature.
2. In which this type of right is expressly reserved inside the settlement in case the buyer needs to make default.
3. In which the seller has given a promise to the buyer of his purpose to resell and the customer does not pay the price within an affordable time.

If on a resale there is a loss to the seller, he can get better from the defaulting customer. However, if there is a surplus at the resale, the seller can preserve it with him because the customer cannot be allowed to take advantage of his personal identity. But, no word of resale [as required in 3 above] is given to the customer, the right of the seller to assert loss and maintain a surplus, if any, is reversed.

In different words, if the unpaid seller fails to present the observation of resale to the buyer, he can not recover the loss from the customer. For this reason, it’ll be visible that giving of observing to the purchaser, when so required that very necessary to make him responsible for the breach of settlement.

It’s so due to the fact this kind of observation gives an opportunity to the purchaser that pays the charge and has the products.

It is vital that the absence of observation when so required affects the rights of the unpaid supplier himself best as mentioned above and it does not have an effect on the name of the following customer who gathers an excellent title to the goods.

Section 54(3) particularly announces- “Where an unpaid seller has exercised his right of lien or stoppage in transit in transit resells the products, the customer acquires a terrific identify thereto as in opposition to the unique purchaser, however, that no note of the resale has been given to the original customer”.

Conclusion

Any set of promises made to form the consideration or part of the consideration for each other are called reciprocal promises and every contract of sale of goods consists of reciprocal promises. The seller’s remedy, in this case, is a suit for damages rather than an action for the full price of the goods.

References

• http://www.shareyouressays.com/english-essays/three-important-rights-of-unpaid-seller-against-the-goods/92211
• https://mercantilelaws.blogspot.com/2012/05/rights-of-unpaid-seller.html

The post Rights of an Unpaid Seller under the Sale of Goods Act appeared first on iPleaders.

This article is written by Antra Shourya from the Faculty of Law, University of Delhi. This article explains the obligations and rights enjoyed by third parties in a treaty and it further discusses how international treaties create objective regimes.

Introduction

International law is more dynamic today than ever, and one of the most important sources of international law is treaties. Treaties play a significant role in international law, they create the bases of all international diplomacy. We often hear that how a particular move by a particular country is a violation of an international treaty or convention hence a violation of the international law. International law is a codified law and has been developed by many international treaties, some of which were pursued and brokered by the International Law Commission, which was established by the United Nations General Assembly (UNGA) in 1947 to develop and codify the international law. The International Law Commission’s continuous efforts and diplomacy led to the adoption of the Vienna Convention on Law Treaties (VCLT) on 23rd May 1969. The Vienna Convention came into force on 27th January 1980. India is not a signatory member of the convention but nevertheless is guided by it. Vienna convention on the law of treaties recognizes the importance of treaties as a source of international law, which makes it important to understand what is the scope and dynamics of a treaty, who can be parties to a treaty and who cannot be.

General principles of a treaty

Article 1 of Vienna Convention on Law of Treaties, says that the convention applies to treaties between states and treaties between international organizations The convention defines a treaty as “an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation.” Further Article 2 of the convention defines “Third State” as State not a party to the treaty. According to the definitions laid down by the Vienna Convention, a “treaty” means an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or two or more related instruments and whatever it’s a particular designation. The word ‘treaty’ covers all forms of international agreements in writing between the states. The convention also covers other subjects of international law such as international organizations, Article 3 covers agreements between states as between themselves and under international agreements to which other subjects of international law are also a party. The general principles of international law with regard to treaties and conventions is that they create rights and obligations to states parties to them through ratification, accession, acceptance or approval, but there are exceptions to rule and sometimes third states also have obligations and rights under a treaty.

Article 34 of the Vienna Convention on Law of Treaties 

Pacta terries nec nocent prount, is a Latin maxim meaning that agreements neither impose obligations nor confer rights on the third state. A treaty primarily binds the parties to it, the principle behind it being that the rights and obligations should only be imposed on the parties who have consented to the rules or conditions. No state is bound by a rule of law unless it has expressly or impliedly assented to it. Article 34 of the Vienna Convention states that “A treaty does not create either obligations or rights for a third State without its consent.” According to the principle laid down in article 34, a treaty is a non-existent piece for third States, a res inter alios acta meaning “a thing done between others does not harm or benefit others” so a treaty can create neither obligations nor rights for third States, which also brings out the contractual nature of treaties.

Obligations and Rights of Third States

Obligations of Third States

The principle of Pacta Tertis Nec Nocent Nec Crosent i.e a treaty cannot create rights or obligations for a third party without its consent is expressed in  Article 35 of Vienna convention that states that “An obligation arises for a third State from the provision of treaty if the parties to the treaty intend the provision to be means of establishing the obligation and the third State expressly accepts that obligation in writing.” 

The two important elements of this article are:

• Firstly, the third parties are consenting to a specific provision of the treaty and not the entire treaty;
• Secondly, the consent has to be expressed in writing. This means that for a State to be bound by an obligation under a treaty to which it is not a party, it must consent to that obligation orally or in writing. 

Sometimes, such an expressed consent directed towards the parties to the treaty leads to the conclusion of a separate agreement between them. Article 35 makes it clear that the third party.

cannot be part of a treaty without their consent. This principle comes from the basic principle of international law of sovereignty, equality and non-interference. Article 34 of the Vienna Convention on Law of Treaties is not drafted in absolute terms. Article 35 of VCLT is based on the principle of consent that a treaty can rise to rights and obligations for a third state but only when the third state has consented to it. According to Article 35, the obligation is created on the third states in two situations namely, first when the parties to the treaties want to establish an obligation for a state not a party to the treaty, and second when the third parties themselves agree to be bound by a treaty.

Exceptions to Obligations of Third States

The general rule of the obligation laid down in Article 35 of VCLT does not apply in certain cases. Article 75 of the UN charter states that an obligation for a third State arises from a provision in a treaty only with its consent would not apply to the case of an aggressor state. Another important exception to the rule expressed in Article 35, that a third State must accept in writing the obligation sought to be imposed upon it by the treaty is contained in Article 2 paragraph 6, of the United Nations Charter which provides that the Organisation shall ensure that states which are not members of the United Nations act in accordance with the principles of UN Charter insofar as may be necessary for the maintenance of international peace and security. This obligation of the third States was confirmed in Namibia case where International Court of Justice held: “As to non- member States, although not bound by Article 24 and 25 of the Charter, they have been called upon in para 2 and para 5 of the resolution 1976 (1970) to give assistance in the action which has been taken by the United Nations with regard to Namibia. 

Rights of Third States 

The rule laid down in Article 36  of VCLT is that “A right arises for a third State from a provision of a treaty if the parties to the treaty intend the provision to accord that right either to the third State, or to a group of States to which it belongs, or to all States, and the third State assents thereto. Its assent shall be presumed so long as the contrary is not indicated unless the treaty otherwise provides.” It further states that a State or an international organization exercising a right in accordance with the above-mentioned provision shall comply with the conditions for its exercise provided for in the treaty or established in conformity with the treaty. The conditions that need to fulfilled to give rights to third parties under a treaty are: firstly that the treaty intends to give rights to the third states, and secondly, the third states consent to the rights give, thirdly, the consent of the third states shall be taken for granted unless it expresses otherwise, and lastly, if the treaty demand that the third state should express it’s approval in a particular way, the consent would only be effective when it is expressed in that particular way. The assent may be presumed on certain aspects, if the treaty doesn’t exclusively talk about these aspects, provided there is no evidence to the contrary.

Revocation or Modification of Obligations or Rights 

The revocation or modification of obligations or rights arising from third states from the provisions of a treaty is covered by Article 37 of the VCLT. Article 37 draws a distinction between obligations and rights. As regard to obligations, the rule is that the obligation may be revoked or modified only with the consent of the parties to the treaty and the third state. As regard to revocation or modification of rights, the rule is that a right which arises for third states may not be revoked or modified by the parties if it is established that the right was intended not to be revocable or subject to modification without the consent of the third state.

International Customary Law as an exception

Article 38 of the VCLT says that “Nothing in Article 34 to 37 precludes a rule set forth in a treaty from becoming binding upon a third party as a customary rule of international law, recognised as such”, which means rules in a treaty which are customary laws may become binding on the third States. Rules and principles laid down in treaty, that has been concluded between two parties, may become generally acceptable by third states and become binding on them by the way of custom. The Hague Conventions on the rules of land warfare were held by the International Military Tribunal at Nuremberg to enunciate rules which had become generally binding rules of customary law. A treaty might contain rules which are customary rules at the time of their formulation in the treaty. Such rules bind the third States, in their status of customary norms of international law and not as conventional norms. Being customary norms, these impose customary obligations on the states. The International court of justice in North Sea Continental Shelf case of 1969 held that for rules of a treaty to become international customary law, that provision of the treaty has to fulfill three conditions:
1. The norm should have the character of becoming a general rule, i.e it should have a universal character.
2. It can pass into the general corpus of international law.
3. It should be accepted by opinio juris i.e. accepted as a general practice and an accepted law. 

Treaties and Objective regimes

What are objective regimes?

There are certain treaties that establish freedom of navigation in international rivers and in maritime waterways; treaties that provide for neutralization or demilitarisation of particular territories or the Antarctic Treaty. These treaties come under a special category of so-called “objective regimes. In many cases where rights of third parties have been derived from a treaty such as in case of establishment of international canals such as the Panama Canal and in Wimbledon case, demilitarisation of certain areas, for example, Aland Island Case or the various peace treaties are also classical cases of objective regimes. The issue of the legal status of so-called objective regimes is related to the issue of the effects of treaties on the third State. Often these issues are viewed together without any doctrinal separation as seen in many cases objective regimes are created by treaties. McNair dwells on this issue in-depth in his Law of Treaties.

Do treaties create objective regimes?

Lord McNair in his book, The Law of Treaties, separate these issue of objective regimes and treaties effects on third states. He analyzed the effect of treaties on third parties within the scope of operation of treaties, as an exception from the general rule pacta tertiis nee nocent nee prosunt, whilst the theoretical and practical problems relating to objective regimes and their effect erga omnes i.e towards all, on a certain type of treaties. But even McNair, who strictly separated the two regimes, observed that the possibility of a theoretical and practical overlap between them, as illustrated by the Free Zones Case. Another writer, however, Arechaga, in his important article “Treaty Stipulations in Favour of Third States”, did not draw any doctrinal distinction between treaties which are in favor of third states and treaties which purport to set up objective regimes. McNair further in his book the Law of Treaties describes types of treaties that create objective regimes, dispositive treaties, and constitutive treaties. 

Dispositive Treaties

Dispositive treaties are those treaties that deal with the management of territories and inherent rights within a territory. An example of a dispositive treaty would be the mandate giving power to South Africa to govern over Namibia. A dispositive character is the nature of the rights that they establish. The treaties of this category create or transfer or recognize the existence of certain permanent rights, which acquire or retain an existence and validity independent of treaties that created or transferred them. This category of treaties generates a type of rights for individuals that are different from the rights acquired under the other general type of treaty. These rights are not in their origin necessarily rights in rem but are like them due to the fact that they are characterized by an objective existence that enables them to survive even when the treaty which generated them became extinct.

Constitutive Treaties 

Constitutive treaties are those treaties which establish a specific regime for the specific geographical area or create a new entity like a state or an international organization. According to Mc Nair, the type of treaty entered into by only certain groups of states, which create an international organization which is endowed with an objective international personality valid erga omnes and effective not only vis-a-vis the states which establishes it but all other states would appear to belong to the category of constitutive or semi legislative treaties. These treaties have a public law character and embody the decisions of a power group of states acting or assuming to act in the public interest. McNair gave examples of the United Nations or of the League of Nations. International political-economic organizations like the European Union, North Atlantic Treaty Organization( NATO), also have characteristics of a constructive treaty.

Vienna Convention on Law of Treaties 1969 and Objective regimes

The Vienna convention leaves objective regimes as the ICL felt that the provisions under Article 36 and 38 provide satisfactory mechanisms to explain the legal nature of objective regimes, in a particular alleged automatic objective effect of certain types of treaties. Situations, where objective regimes are created by treaties, are very limited under the Vienna treaty on the Law of Treaties. Article 36 covers situations, like in the case of, the regimes of Turkish Straits or of the Kiel Canal that exemplify a general category of treaties providing for an establishment of land or maritime territory utilization by third states and may be said to create automatic legal effects in relation to third states (effective without any express agreement). These regimes are mostly aimed at the establishment of rights and are accompanied by the exercise of certain obligations by third states as a condition for exercising these rights.

Case Studies

Free Zone Case

In 1932, the Permanent Court of International Justice (PCIJ) gave the judgment of conflict between Switzerland and France over a territorial dispute. In Free Zone Case, Switzerland, a third party, enjoyed since 1815 the benefit of a free customs zone in Upper Savoy and Gex district of France in accordance with a stipulation made in her favor by certain multipartite treaties to which France was a party. Switzerland, though not a party, accepted those benefits. According to Article 435 of the Treaty of Versailles free zone were inconsistent with rules of treaty and France and Switzerland had to come to an agreement with regard to the free zones. France wanted to abolish the free zones. The matter was to be settled in the court of PCIJ. The court did not abolish the free zones and held that Switzerland was not a party to the Treaty of Versailles hence it can’t be bound by the same. The creation of the free zone form part of an agreement to which France was party to with other states, which was in favor of Switzerland. The agreement made a stipulation in favor of Switzerland. It was held that she could not be deprived of that right without her consent.

Panama Canal Case

Hay-Pauncefote Treaty 1901

The treaties governing the Panama Canal give third states the right of usage of the canal under the condition of conforming to rules governing the Canal, taking this interpretation of the treaties, we can say in case of Panama canal Article 36 para 1 and para 2 of VCLT are applicable. The Hay-Pauncefote Treaty was concluded between the United States of America and the United Kingdom, it was clear in the treaty that both the countries were unwilling to give or provide any rights to the third states. Although the treaty didn’t have any adherence provision it did state that the canal shall remain open and free to all vessels observing the rules laid down by the treaty. The Panama Treaty signed between the United States and Panama in 1977 established a framework for the operation of the canal until 31 December 1999.

Panama Treaty 1977

The Panama Treaty of 1977 abrogated the 1901 Treaty, and gave Panama Sovereignty over the canal, and also gave the United States the right to manage, operate, maintain, improve, protect and defend the canal until the year 2000. The second treaty was the Treaty concerning the Permanent Neutrality and Operation of the Panama Canal. Article 1 of the treaty declared that “the Canal, as an international waterway, shall be permanently neutral in accordance with the regime established in this Treaty. The treaty required all the vessels to adhere to the rules and regulations laid down by the treaty, further after 2000, the treaty gave the republic of Panama exclusive rights over the operation of the canal. Article 7 of the treaty proposes that the United States and Panama “shall jointly sponsor a resolution in the organization of American States opening to accession by all States of the world the Protocol to this Treaty whereby all the signatories will adhere to the objectives of this treaty, agreeing to respect the regime of neutrality set forth herein.” This Protocol is open to accession by an international community to recognize as widely as possible neutrality of the Canal. It may be observed that there were no reactions from third states as to the neutrality treaty and the Protocol.

Treaties like the Panama Treaty and Suez Canal Treaty try to establish a legal framework where rights can be given to third states as regards to the use of the canal but the United States in relation to the legal status of the Panama Canal denied rights to the third parties. Neither the character (procedural and substantive) nor the scope of these rights for third states nor the locus standi in the event of their breach is precisely defined. It may even be that these entitlements for third states are not rights but benefits only, and such an interpretation would further limit the possibility of any claims from thirds States in relation to the breach of a condition of the use of, or denial of, access to the canals in question.

Wimbledon Case

Facts of the case 

The Wimbledon Case was regarding the legal status of the Kiel Canal. The Kiel canal passes through Germany and links the Baltic and North Seas. The legal status of the canal was settled in 1919 by the Treaty of Versailles (Article 380-386) which made the canal open to all parties to the treaty. Article380 made canal free and open to vessels of commerce and of the war of all nations at peace with Germany and on terms of entire equality. During the 1920 Polish – Russian war an English ship, authorized by French shippers, was banned from accessing the Kiel canal by the Government of Germany, the ship was carrying munitions for the Polish Government. The German Government took the ground that if it allowed the passage of said ship it would be a breach of Germany’s neutrality in the war. A case was brought against Germany by all the states party to the Treaty of Versailles.

Court’s Decision

The Permanent Court of International Justice held in this case that Germany was bound by Article 380 of Treaty of Versailles, it was obliged by the virtue of Article 380 to allow passage of all vessels until their passage is a violation of this article. Since Russia was not a party to the Treaty of Versailles, the court rejected Germany’s grounds of neutrality in the war. The court also said that Germany could take the legal ground of neutrality in war for not performing its obligations as a neutral state and that Russia and Germany were bound by general customary law on neutrality further the court said that the passage of warships and war materials, through canals did not compromise the neutrality of the states which had territorial sovereignty or jurisdiction over them.

Legal Status of Kiel Canal

On the question of the legal status of the Kiel Canal, the court established it as a “new regime” under the Treaty of Versailles, which was to be applied objectively for international navigation. But the Court did not define the nature of passage through the Kiel canal for third parties whether it is a right or a benefit. Making it a right would give third states a locus standi before international courts and tribunals. In conclusion, it may be said that the Court has admitted the existence of a certain “objective and permanent” regime of the Kiel Canal based on a treaty, without a strict definition, as to the nature of rights (if any) deriving from this regime for third states.

Conclusion

• The Vienna Convention on Law of treaties 1969 lays down important provisions in regard to the position of third States in a treaty. The basic principle laid down in the VCLT is that the treaties are only applicable to the third states when they have consented to it. The Convention upheld the general principle of sovereignty of the states and gives rights or obligations to states only when they have consented to it.
• Treaties establishing objective regimes and are erga omnes like treaties establishing freedom of navigation in international rivers and maritime waterways are applicable to third parties if they have consented to certain provisions of the treaty it is not necessary that they consent to the whole treaty.
• Rights can only be conferred to the third states when there is an intention for the same; sometimes rights confer on their own, or rights may be conferred with a duty to exercise a certain obligation.
• There are exceptions to the rules of an obligation under Article 35 of VCLT like the obligations imposed by the United Nations Charter for international peace and stability.
• A treaty creates rights or obligations for a third state under two situations namely, firstly when the states parties to the treaties intended to create such rights or obligations, and secondly the third consent to such rights or obligations. Rights of the third states can only be revoked or modified only when the treaty specifies that the rights given were revocable, and the third parties have consented to it. 
• Third parties have to adhere to the provisions or obligations of a treaty if the provisions of the treaties are customary international law.

Reference

1. https://treaties.un.org/doc/publication/unts/volume%201155/volume-1155-i-18232-english.pdf
2. https://treaties.un.org/doc/publication/ctc/uncharter.pdf
3. https://www.loc.gov/law/help/us-treaties/bevans/b-gb-ust000012-0258.pdf
4. https://2001-2009.state.gov/p/wha/rlnks/11936.htm
5. https://loveman.sdsu.edu/docs/1888ConstantinopleConventionon.pdf
6. https://pustakahpi.kemlu.go.id/app/Opinio%20Juris%20Vol%201%20Jan-Maret%202010_39_48.pdf
7. Third States and Law of Treaties, Malgosia Fitzmaurice https://www.mpil.de/files/pdf1/mpunyb_fitzmaurice_6.pdf
8. International Law, Second edition, Gurpid Singh

The post Treaties and Third Parties under International Law appeared first on iPleaders.

This article is written by Kashish Kundlani, from Ramaiah Institute of Legal Studies, Bangalore. In this article, she discusses the International efforts to protect and improve the environment.

Introduction 

How blessed the countries are, as we are surrounded by beautiful nature and wildlife. In our surrounding, so many species are there which require a need to protect them as well as to conserve the environment. The exploitation of the environment can deplete the natural resources and in result will make everyone’s survival difficult. For human beings to survive, the environment needs to be clean, fresh and eco-friendly. It has been rightly said by Margaret Mead that “We won’t have a society if we destroy the environment”.  Indeed it is true and we can see the effects of the exploitation in the changing environment. 

Issues of environment protection

The need to protect the environment has arisen and it is important to understand the key areas where all the countries have to look upon and work. 

The main reasons for the protection are:-

• Ozone depletion, greenhouse effect and global warming– 

Ozone is a thick layer which acts as a shield to protect the earth from the ultraviolet radiations coming from the sun. This layer is of great importance because of the but obvious reason that its depletion will result in ultraviolet radiations. The concern or agitation arises towards the environment when this layer starts depleting or gets reduced. Earlier also the depletion of the ozone layer was the issue and now also it is the prevalent and significant issue which within the timeframe if not tackled then can cause a lot of problems to the environment as well as to the human beings.

For example, skin cancer, premature ageing,  eye damage, weak immune system etc. The main reason affecting the ozone layer is Chlorofluorocarbons (CFCs) which are mostly produced by the industries discharging chemicals and can also be found in household products. The ozone layer depletion is linked to the greenhouse effect and also with global warming.

Greenhouse effect- It is caused by the emissions of the pollutant gasses like methane, CFCs etc. When these gases are released or get mixed in the atmosphere, it results in the temperature to rise and this is known as global warming.

• Desertification– 

In simpler terms, this issue means land degradation. The destruction of the potentiality of the land which ultimately at the end results in a drought-like situation.

The example of land degradation is deforestation, change in climate etc. Where this kind of a situation arises, it forces the people residing there to migrate to another land or place. 

• Deforestation– 

It is a very recurring issue which every country faces. Deforestation not only affects climate but it also affects the animals living in the forests. It is an alarming issue which is every now and then country has to deal with. 

• Loss of biodiversity–

It is related to the extinction of the species from the earth and the reason is deforestation. Biodiversity means the variety of life on earth. Many of the species have already become extinct from the earth. Extinction of the species disturbs the balance of the ecosystem as well as disturbs the balance of the living species and also human beings. Earth’s biodiversity provides various sources from which we can get food and also medicinal plants. Besides deforestation the other reasons for the loss of biodiversity are fragmentation, using chemical fertilizers, pesticides, overexploiting the resources available etc.

• Disposal of wastes–

Disposing of the waste is also an important and significant issue. The major portion of waste is contributed by the industries and household. These industries or household wastes are either dumped in water or in empty unused land. 

As a result, the water gets contaminated and there are likely chances to get many diseases from that- for example, diarrhoea, typhoid fever etc. Industrial wastes consist of chemicals, metal compounds, nuclear waste etc. The nuclear waste is radioactive waste which gives rise to the large quantity of heat. These wastes are serious health hazards and endanger the environment and life. 

Treaties and conventions- for the improvement and protection of the environment

Montreal Protocol 

It was finalized in the year 1987 and adopted on 15 September 1987. It is a multilateral environmental agreement and this protocol is the only UN treaty ever up to date which was initially approved by only 46 countries but now it is ratified by all 197 UN member countries/states. This protocol regulates the production and consumption of man-made chemicals which can deplete the ozone layer. 

This treaty was made for the reason that certain substances or chemicals when released in the atmosphere that damages the stratospheric ozone layer which is earth’s protective shield that protects humans and as well as the environment from the harmful levels of ultraviolet radiations of the sun. The stratospheric layer in fact filters out the harmful radiation. If it doesn’t get filtered then there are increasing chances of having skin cancer and cataracts, and also reduces the agricultural productivity and damages the marine ecosystems. 

Under this treaty, the developed and developing countries have equal but differentiated responsibilities towards the ozone-depleting substances (ODS) but both groups countries have binding, time-targeted and measurable commitments. All countries have been given specific responsibilities relating to the curtailment of the ozone-depleting substances.

India became the signatory member of this treaty on 19th June 1992.

Hydrochlorofluorocarbons (HCFCs) is the gas which is used worldwide. It is present in the refrigerator, air-conditioners etc. It is very harmful and powerful than carbon dioxide.

The Montreal protocol has taken steps to control this harmful substance.

On 15th October 2016, parties of the Montreal Protocol adopted the Kigali amendment to curtail the consumption and production of the hydrofluorocarbons (HFCs). Countries have agreed to add HFCs to the list of controlled substances. The Kigali Amendment came into force on 1 January 2019 for those countries that have confirmed to this amendment.

Kyoto Protocol

Second commitment of Kyoto Protocol (2013-2020), bridges the gap between the end of the first commitment and the start of the second commitment with further emission cuts. The Kyoto Protocol is an international agreement within the United Nations Framework Convention on Climate Change (UNFCCC), which commits its Annex B-Parties (the countries which have adopted the targets to reduce the greenhouse emissions) with legally binding emission reduction commitments.

Whereas, in Annex A- six greenhouse gases are there where the Kyoto Protocol is applied the six greenhouse gases are:-  Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), Hydrofluorocarbons (HFCs), Perfluorocarbons (PFCs), and Sulphur hexafluoride (SF6).

Click Here

Paris Agreement

It is an agreement within the United Nations Framework Convention on Climate Change (UNFCC) which focuses on reducing the greenhouse gas emissions. It is replaced by its predecessor, the Kyoto protocol which is also the international treaty for similar purposes and its second commitment expires this year i.e. 2020. The Paris Agreement came into force on 4th November 2016 and has been signed by 197 countries and as of November 2019- 187 countries have confirmed. India has also given its consent to this agreement. In the whole world, India stands at third after China and the US when it comes to the emission of the greenhouse effect according to May 2019.

The primary motive of this agreement is to fight back against climate change. This agreement also aims to curb the emission of the greenhouse to a certain level 

Kyiv Protocol on Pollutant Release and Transfer Registers 

On 8 October 2009, it became an International Law and is the only instrument which is legally binding upon the parties. The objective of this protocol is to increase public access to information through the formation of a systematic pollutant release and transfer registers.

All the UN member states can join this Protocol as it is designed by an ‘open global treaty’.

Vienna Convention for the Protection of the Ozone Layer 1985

Initially, this convention was agreed in 1985 and it came into force on 22 September 1988. It is a multilateral agreement. Montreal protocol comes under this convention. This convention was formed with a purpose to globally monitor and report on the ozone depletion. Under this convention, it made structures for the improvement of protocols and also for taking a more binding action.

The Vienna Convention and its Montreal Protocol are the first and the only global environmental treaties to obtain universal acceptance, with 197 member countries. The Vienna Convention does not include any goals which are legally binding on the countries. 

These legally binding goals are framed under the Montreal protocol with regards to the substances that can deplete the ozone layer.

Aarhus Convention

This United Nations Economic Commission for  Europe (UNECE) Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters often referred to as Aarhus convention. It was adopted on 25th January 1998 and it came into force in October 2001. Only 47 Parties have ratified to this Convention till 16 October 2017.

In conjunction with its Kyiv protocol, it also aims to protect every person’s right to live in an environment which is sufficient enough for his/her health and also the well-being and also in accordance with the provision of this convention, each Party must guarantee the rights of access to information, public participation in decision-making, and access to justice in environmental matters.

Basel Convention on the control of transboundary movements of hazardous waste and their disposal 1989

Commonly it is known as the Basel Convention. The Basel Convention was adopted in March 1989 in Basel, Switzerland, and came into force in 1992 and 187 parties are members of this convention till October 2018. It is an international treaty which formulated plans against the adverse effects of hazardous wastes in order to protect human health and the environment.

Basically, it made a structure or a framework in such a way so as to reduce the movement of hazardous waste between the nations and also to restrain the movement of waste from developed countries to less developed countries because the less developed countries are unable to dispose of the hazardous waste in an environment-friendly way and it pollutes the environment tremendously. On 24th June 1992, India ratified to this convention and included some of the provisions from this convention in its Act i.e the Hazardous and Other Wastes (Management and Transboundary Movement) Rules of 2016.

Basel Ban Amendment 1995

This amendment intends to prohibit the export of hazardous/dumped waste for any purpose to the developing countries. After Croatia ratified to this amendment on 6th September 2019 it has become an International Law. It entered into force on 5th December 2019. Till now the countries who haven’t ratified to this amendment are- the US, Canada, Japan, Australia, New Zealand, South Korea, Russia, India, Brazil, and Mexico.

Berne Convention on the conservation of European wildlife and natural habitats

This convention is a binding international legal instrument. The purpose of introducing this convention is to protect and conserve the species of flora and fauna and also their habitats.

After the discussions at the Council of Europe, the Berne Convention was introduced and has been in force since June 1982. By April 2019 there are 177 states that are parties to this Convention and since April 1928, India has been a member of the Berne Convention.

This was the first international treaty which looked into the matter relating to the protection of both species and habitats. And it also seeks to bring all the countries together so that they can determine an action to protect nature and to promote sustainable development.

The ratifying parties to be a part of this convention have to maintain biodiversity in the long term, according to different scientific and ecological requirements.

Convention on Biological Diversity, 1992 (CBD)

This convention provides a legally binding framework which came into force in 1993 with a purpose to conserve the biodiversity and use biodiversity feasibly. The main objective of this convention is to encourage those actions which will lead to a sustainable or viable future. The governing body of this convention is the Conference of the Parties (COP).

India giving effect to the provision of this convention enacted the Biological Diversity Act in 2002 which also provides a framework in order to tackle the issues related to biodiversity. Following this convention, India has taken part in many conventions which are related to conserving biodiversity.

In October 2020, the Governments have decided to gather at the UN Biodiversity Conference on Biodiversity (CBD COP15) in Kunming, China to decide upon an agreement regarding the new framework. To develop the post-2020 global biodiversity framework, it requires wide-range consultations, working of the groups and also meetings of the expert person involved in this convention.

The motive of this gathering regarding the Post-2020 Global Biodiversity Framework will is to define the mission for 2030 and to define a long-term vision for 2050 which has to be achieved with goals and targets, in order to encourage and synchronize the global efforts for conserving the planet’s biodiversity.

Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)

This convention is an international agreement between the countries and entered into force in 1975 which aims to protect wildlife from over-exploitation due to international trade. Basically under this agreement, the government regulates the traded wildlife and its products that it does not threaten the survival of the species in the wild, for example, leather goods, animals, food etc.

Convention on Long-Range Transboundary Air Pollution (CLRTAP)

This convention came into force on 16th March 1983. This convention aims that the contracting parties should make efforts to protect the environment against the adverse effects of the pollution, to ensure that the parties take several and necessary steps to fight against the release of the air pollutants and also to create committees for the further progress and imposition of the convention.

Convention on the Conservation of Migratory Species of Wild Animals (CMS)

This convention is an international treaty under the aegis of the United Nations Environment Programme. It came into force on 1st November 1983. Since 1983 India is a party to this convention. The primary focus of this convention is to provide for the conservation and sustainable use of migratory animals and their habitats. This convention tries to complement and co-operate the provisions with a number of international organisations, NGOs, corporate sector etc.

The recent event regarding this convention will be hosted by India from 15th to 22nd February 2020 at Gandhinagar in Gujarat, which will be the 13th Conference of Parties (COP). The eminent conservationists, international NGOs working in the field of wildlife conservation and representatives from 129 Parties are expected to attend the Conference. 

Convention on the Conservation of Migratory Species of Wild Animals (CMS)

This convention came into force on 1st January 2005 and as of February 2018, only 39 Council of Europe member states have ratified the Convention. 

The motive of this convention is to protect and manage the landscapes and to organise the international co-operation on landscape issues. The parties of this convention in order to implement the provision should undertake the activities which are set to raise public awareness, defining the quality of landscapes etc.

Minamata Convention on Mercury

This convention is a global treaty and entered into force on 16 August 2017 and as of 1st March 2019- a total of 105 parties (includes India also) have ratified to this convention.

The objective of this convention is to protect humans and the environment from the dangerous effects of the mercury. In Japan, there is a city named Minamata where the local communities got poisoned by contaminated mercury industrial wastewater at the end of the year 1950 and suffered untreatable and disabled effects. So the convention is named after this town.

Ramsar Convention on Wetlands

This convention is an intergovernmental treaty adopted on 2nd February 1971 and it entered into force on 21 December 1975. It provides a framework for international and national cooperation so that they can achieve sustainable development throughout the world by taking efforts towards the conservation and judicious/wise use of the wetlands. As of January 2016, 170 nations have joined the Convention as Contracting Parties. 

But the question arises that why we should conserve wetlands? Let’s first understand what are wetlands: they are those areas where water is the main source or part for controlling the environment and the related plant and animal life over there. They occur where the water table is either there or near to the surface of the land. And the conservation of wetlands is important because they are the only source of biological diversity which provides the water to the countless species of plants and animals who are depending on wetlands for its survival.

They help or contribute to the high masses of birds, mammals, reptiles, amphibians, fish and invertebrate species. Over-exploitation of freshwater resources by humans puts all the other people and as well as the environment at risk. 

By degrading the wetlands, the certainty to avail the access to safe water, human health, food production, economic development and geopolitical stability becomes difficult and also the degradation of wetlands has rapidly widened the gap between water demand and supply. 

The Ramsar convention under its fourth strategic plan set off a period from 2016-2024 with almost the same objectives mentioned earlier.

Stockholm Convention on Persistent Organic Pollutants

This convention is a legally binding international treaty which was adopted on 22nd May 2001 in Sweden and it came into force on 17th May 2004. Its objective is to protect human health and the environment from the dangerous outcomes from the organic pollutants (Pesticides, Industrial chemical, Aldrin etc.). POPs are the chemicals that remain intact in the environment for long periods and it gets widely distributed in the overall area which collects or gathers the fatty tissue of the living organisms which are toxic to the humans and wildlife. These POPs circulates globally which in result can cause damage wherever they travel. 

United Nations Framework Convention on Climate Change (UNFCCC)

It is an international environmental treaty which was adopted on 9th May 1992, and it was opened for signature at the United Nations Conference on Environment and Development. It is also known as Rio de Janeiro Earth Summit or Rio summit. It came into force on 21st March  1994. Almost every country on earth has ratified this convention.

It is an agreement made on climate change and mainly focuses on the prevention of dangerous actions or interference by humans on climate change or on the environment. The parties also agreed towards the stabilization of the greenhouse gas emissions. Every party/country by signing to this convention have dedicated themselves to do the regular reporting regarding the level of greenhouse emissions and also their initiation to reduce the interference. 

World Heritage Convention

This convention was adopted by the United Nations Educational, Scientific and Cultural Organisation (UNESCO) in 1972 and as of 31st January 2016- 193 state parties (including India) have ratified to this convention. The primary objective of this convention is to protect the world’s natural and cultural heritage. It also manifests an idea that few places are so important that their protection is not only the responsibility of a single nation, but is also the duty of the international community as a whole, and not only for this generation but for all those to come. 

International organizations concerned with the environment destruction

Earth System Governance Project (ESGP) 

It started in January 2009. This is a research project and focuses on global change by the human’s action. The objective of the ESGP is to publish research which is concerned with the difficulties of regulating and controlling the global environmental change. By this analysis on the research, the researchers to an extent better understand the roles and responsibilities of organizations institutions and governments in the matter related to the environmental changes.

Intergovernmental Panel on Climate Change (IPCC) 

The IPCC was established by the World Meteorological Organisation (WMO) in 1988. For the assessment of climate change, it is the leading international body and is also the source of scientific information and technical guidance for Parties. The purpose of this organisation/ panel is to offer the world an unbiased, scientific assessment of climate change and its effects.

World Nature Organization (WNO) 

The WNO entered into force on May 1st 2014. Several countries- mainly emerging and developing countries were in favour of setting up a permanent international platform. It committed the protection to the international level and mainly focuses on energy efficiency, protection of the climate, sustainable development and a sustainable energy supply

United Nations Environment Programme (UNEP) 

The UNEP was founded in June 1972 and its headquarter is in Nairobi, Kenya. It’s a coordinating body of the United Nations environmental activities and played an important role in analysing the identified problems related to the environment, took efforts to develop environmental programmes and conventions at regional and international level and encourages the environmental science

International Union for Conservation of Nature (IUCN) 

The IUCN was established in 1948 on the 5th of October and it includes government and non-government members. Its goal is to promote nature conservation and the sustainable use of natural resources around the globe. It also focuses on issues such as poverty, gender equality etc.

Global Environment Facility (GEF)

In the year 1991, the GEF  was established as an alliance among 183 nations. Regarding climate change, land degradation, intentional water, biodiversity and the ozone layer, the organisation finances issues. The GEF provides grants for projects related to biodiversity, climate change, international waters, land degradation, the ozone layer, persistent organic pollutants (POPs), mercury, sustainable forest management, food security, sustainable cities. Basically, the purpose of this facility is to fund these subjects or problems.

Community-based Adaptation (CAB) Conference

Any change in the climate such as earthquake, drought, floods etc. adversely affects the poor or vulnerable people more than the settled and civilized one. The local communities, academics and project managers develop ways to cope up or tackle with the climate change and International Institute for Environment and Development (IIED) has worked to help them by sharing the knowledge developed by them.

IIED organises Community-based adaptation to climate change (CBA)  which focuses on granting the communities to use their own knowledge and decision-making processes to take action on climate change. The upcoming conference will take place in May 2020 at Bangkok, Thailand which will be the 14th conference on Community Based Adaptation to climate change. This conference will bring forth an open and interactive space for the community to meet and explore the transformative solutions.

Youth Climate Summit 2019

The UN Youth Climate Summit, 21st September 2019 took place at the United Nations Headquarters in New York prior to the UN Secretary-General’s Climate Action Summit on Monday, September 23, where the young climate action leaders were given a platform to tell the solutions as they think at the United Nations.

UN Climate Action Summit 2019 

The UN climate action Summit was organised by the UN Secretary-General António Guterres where all leaders were called to New York on 23 September 2019 with a realistic and detailed plans to strengthen their determined contributions by 2020, which was regarding the reduction of the greenhouse gas emissions by 45 per cent over the next decade, and to reduce it to zero emissions by 2050. 

This summit on climate action and also the Youth climate action succeeded as it gathered the attention of the world leaders, government, private sector and civil society on the extremity for action to tackle the climate disaster 

The Summit also exhibited the need to urgently update and reinforce their short-term commitments by 2020, and the mid-term commitments by 2030, that will be shown or represented in their national climate plans, known as Nationally Determined Contributions to the Paris Agreement.

The Summit gave them a good opportunity to exhibit the political leadership of 70 countries which were anxious and also were committed to delivering more aspiring and assertive plans on the climate change in 2020 and the strategies to reduce the emission to zero by 2050.

Conclusion

It is the need of the moment that people, government, leaders etc. to cater to environmental degradation which is getting worse day-by-day due to the ignorance of the people towards the environment. Many government organisations, NGOs etc. have taken initiative to protect the environment but it can only be protected when the people with the understanding and enthusiasm protect and conserve the environment.

Few of the examples where we can see the environment changing due to global warming are:-  Kerala floods India in 2019, where almost all the districts of Kerala were affected, Australia bushfire 2019- in 2020 is still ongoing where many species have died, environment is fully destroyed, pollution has risen in that country and many more issues. 

According to Argentinian research station thermometer, on 7th February 2020, Antarctica has recorded the hottest temperature so far which is 65 degrees Fahrenheit (18.27-degree Celsius) though officially WMO has not verified the finding yet as it will require a panel of atmospheric science experts from around the world to discuss the station’s data.

References

• https://www.unenvironment.org/ozonaction/who-we-are/about-montreal-protocol
• https://www.worldatlas.com/articles/major-international-environmental-organizations-operating-in-the-world-today.html
• https://www.unece.org/fileadmin/DAM/env/pp/documents/cep43e.pdf
• https://www.geographyandyou.com/international-agreements-environment-india/

The post International Efforts for Protecting & Improving the Environment appeared first on iPleaders.

This article has been written by Ishaan Banerjee from the Vivekananda Institute of Professional Studies, affiliated to Guru Gobind Indraprastha University. This article explains the doctrine of rebus sic stantibus, its application and its role in international law and also looks at several instances where this doctrine was raised.  

Introduction

The phrase ‘rebus sic stantibus’ (things thus standing) is a Latin phrase that refers to a situation where a contract cannot be withdrawn from or terminated as long as the conditions and circumstances surrounding the contract have not fundamentally changed. This has often been used in the form of doctrine in international law, more specifically in treaty law, and has been a subject of debate and disputes. This doctrine is a part of customary international law but a provision for this doctrine has been provided in Article 62 of the Vienna Convention on the Law of Treaties 1969 as well. In this article, we shall explore the constitution of this doctrine, the grounds, and objectives, as well as cases where this doctrine was used.

What is the doctrine of rebus sic stantibus?

Clausula rebus sic stantibus is a doctrine that allows for the contract or treaty to be withdrawn from or terminated when there is a fundamental change in the circumstances of the contract or treaty. It helps to escape the principle of ‘pacta sunt servanda’, which stipulates that all states must abide by the agreements formed between them in good faith. Pacta sunt servanda is also legally provided for in Article 26 of the Vienna Convention which provides that treaties in force are binding upon parties and are to be performed in good faith.

On what basis can this doctrine be applied?

Article 62 of the Vienna Convention on the Law of Treaties 1969 talks about the fundamental change of circumstances in which rebus sic stantibus can be invoked, however, this is also subject to conditions-

• There must be a fundamental change in the circumstances prevailing at the point where the treaty was concluded to the present prevailing circumstances. Such fundamental change must not have been foreseen by the parties.
• Those circumstances must have constituted an essential basis of the consent of the parties by which they entered and agreed to be bound by the treaty.
• The change has the effect of substantially and radically transforming the extent of obligations of a party under the treaty.
• If the treaty does not establish a boundary.
• If the fundamental change has occurred because of a breach by a party invoking the said change, this doctrine cannot be used to escape the obligations under the treaty. This breach can be a breach of an obligation under the treaty or the breach of any international obligation owed to any party under that treaty.

Objectives of rebus sic stantibus

The doctrine of rebus sic stantibus is not expressly mentioned in any international legal instrument but Article 62 of the Vienna Convention talks about fundamental change of circumstances. This doctrine has been often used in international relations by parties to withdraw from treaties. A state may use this doctrine where-

• At the time of the conclusion of the treaty, the state thinks the terms of the treaty to be beneficial but later might realise it to be unbeneficial. There might be some internal situation in a state where the treaty is found to be detrimental or harmful to the state. In such situations, the state may look to withdraw, terminate, suspend operations or render the treaty invalid.
• State sovereignty and policy might dictate that the state not always follow the terms of the treaty therefore the state might choose to withdraw from a treaty. If the state deems a treaty detrimental to its security or security of its subjects, it may choose this option. 

Therefore, it is observed that often states cite their own internal reasons like protection of its interests, to use this doctrine. This doctrine serves the objective of protecting state interests while simultaneously preventing misuse through the condition of ‘fundamental change in circumstances.’

Conflict of rebus sic stantibus with pacta sunt servanda and international law

There arises a conflict of rebus sic stantibus with pacta sunt servanda and international law due to their opposing nature and this has been a subject of great debate and legal discourse. Some contentions in favour of it are-

• There might be valid reasons for a state withdrawing from a treaty. This can usually happen when a state considers conditions and circumstances prevailing at the time of the conclusion of the treaty to be beneficial to it only to find that that was not the case. 
• The operation of the treaty might also hurt the functioning of the state, and the state may find the treaty to be unbeneficial or even detrimental to the interests of its subjects. 
• Going by the theories of sovereignty given by thinkers like Austin, who defined sovereignty as supreme and unquestionable. The state would work on its own will, therefore withdrawing from treaties whenever it chooses.

Some contentions against the doctrine are-

• While the very purpose of international law is to maintain order in state relations and among nations, there has been a view that providing for the doctrine of rebus sic stantibus in international law would nullify the purpose of international treaty law. 
• There are fears that states may have their own concept of ‘fundamental change’ and would use the excuse of state sovereignty to misuse this doctrine to pull out of treaties. 
•  The criticism arises that absolute power vested in the hands of the state would lead to arbitrary actions and suppression of human freedom and rights, and this would enable a state to do anything it wills, disregarding international law and morality.

Therefore, keeping in mind these arguments, international law has provided for provisions for both the doctrines of rebus sic stantibus and pacta sunt servanda, with requisite conditions.

Invalidity and termination of treaties with respect to international law

Article 42 and 43 of the Vienna Convention stipulate the conditions under international law when a treaty can be terminated. 

Article 42 states that the validity of a treaty and the consent of a party that binds it to the treaty can be impeached only through the application of the Vienna Convention. 

Article 43 states that invalidity, termination, denunciation, withdrawal, and suspension of operations, occurring through the application of the Vienna Convention or through the said treaty-

• would not obstruct or impair the duty of a State which it owes under international law, independent of the treaty. 
• A further simplification of this could be explained as: a State which withdraws from a treaty requiring the performance of a particular obligation would still be required to perform that obligation if other international law instruments to which it is a party, so dictate.

A similar provision to Article 43 of the Vienna Convention is Article 103 of the United Nations Charter, which states that in the event of a conflict between the obligations arising out of a treaty between parties and the obligations under the UN Charter, the obligations towards the UN Charter would prevail.

These provisions serve as a protection against the misuse of rebus sic stantibus as the termination can be done only through the application of the Vienna Convention and a State would still need to perform any obligation under international law even if it withdraws from a treaty, assuming that is it also a party to that international law instrument which stipulates the performance of that duty.

The procedure followed after the termination of a treaty 

Article 65 of the Vienna Convention stipulates the procedure that is to be followed when a treaty is terminated, withdrawn from, rendered invalid or has its operations suspended. The procedure is as follows-

• The party must notify the other parties of its claim; be it withdrawal, termination, operations suspension or invalidity. This notification shall state the measure to be taken. 
• There is an expiry period of three months after the receipt of the notification, during which parties to the treaty are allowed to raise objections against the actions of the claimant party. If after the expiry period, no party has raised an objection, the claimant party can proceed with its stipulated measure according to Article 67.
• In the event of an objection being raised by any other party, the parties shall together operate to get a solution under Article 33 of the United Nations Charter. 

Important cases and examples of the use of the doctrine of rebus sic stantibus

• In 1870, Russia notified the other parties that it no longer considered itself bound by Articles 11, 13 and 14 of the Treaty of Paris 1856, which was a treaty on military shipping. Russia also notified that it was unilaterally withdrawing from the treaty. It used the doctrine of rebus sic stantibus citing that the circumstances had changed as the port of Batoum was no longer free. The outcome of this incident was decided in a conference in London where it was decided that unilateral withdrawal would be prohibited. 
• During the Bosnian Crisis of 1908, the then empire of Austria – Hungary refused its rights and obligations under Article 25 of the Treaty of Berlin 1878. It annexed the territory of Bosnia-Herzegovina despite its obligation to only occupy the territory. It cited fundamentally changed circumstances wherein the conditions had changed in the Balkan states, most notably in the combining of Bulgaria and Eastern Rumelia. This set an important precedent in the use of rebus sic stantibus.
• In 1924, Norway dissolved the 1907 treaty with Sweden. This treaty had arisen out of the dissolution of the Union of Norway and Sweden. Norway cited changed circumstances like the Russian Revolution, the Versailles Treaty and the entry of Norway into the League of Nations. This treaty was restricted by a time limit, but the doctrine of rebus sic stantibus was still held to be applicable, thus setting the precedent that the doctrine is not only applicable to indefinite treaties, but also on definite as well. 

The Fisheries Jurisdiction case

• The most important case of the use of rebus sic stantibus in recent times is that of the Fisheries Jurisdiction case (United Kingdom of Great Britain & Northern Ireland v. Iceland [I.C.J. Reports 1973, p. 3.) In this case, the International Court of Justice judged a dispute wherein Iceland sought to extend its fisheries jurisdiction from 12 to 50 miles.
•  In 1961, the United Kingdom reached a settlement with Iceland that there would be a 12-mile fishery zone around Iceland and in return, any dispute regarding the Icelandic fishing zones shall be referred to the International Court of Justice. 
• However, in 1971, Iceland decided to extend the fishing zone to 50 miles and also decided that the 1961 settlement was no longer in effect. The United Kingdom thus approached the International Court of Justice. 
• Iceland contended that there had been a change in the circumstances since the 12-mile limit was now recognized by both parties through the 1961 settlement and this change necessitated the extension of the zone. 
• The main issue to be dealt with here by the Court was whether it was necessary that there be a transformation of the extent of the obligation to be performed by the party so that a change in circumstances may give rise to the termination of a treaty.
• The Court thus held that the 1978 Icelandic Regulations were a unilateral extension exercised by only Iceland and that it could not unilaterally exclude the United Kingdom from fishing in the areas agreed under the 1961 settlement. It was further held that in order to effect a change in circumstances for termination of a treaty, it is necessary that there has been a transformation of the extent of obligations yet to be performed. The change in the circumstances did not transform the extent of the jurisdictional obligation of Iceland to limit the fishery zone to 12 miles under the 1961 settlement.

Conclusion 

The doctrine of rebus sic stantibus is a controversial one, embroiled in fears of its misuse. It can be observed that international law has, to an extent, laid down the limits of the use of this doctrine through express provision as well as procedure, wherein objections can be raised towards the actions of a party. However, the use of the doctrine is still under the scanner, and it actually depends upon the discretion of the judicial body to determine whether there has been a fundamental change in circumstances along with a transformation in the extent of the obligation to be performed.

References

1. https://www.merriam-webster.com/dictionary/rebus%20sic%20stantibus
2. https://www.law.cornell.edu/wex/rebus_sic_stantibus
3. http://www.duhaime.org/LegalDictionary/R/RebusSicStantibus.aspx
4. https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=8268&context=penn_law_review
5. https://www.brainkart.com/article/Austin-s-Theory-Of-Sovereignty-(Monistic-View)_1626/
6. https://www.informea.org/en/court-decision/fisheries-jurisdiction-case-united-kingdom-great-britain-and-northern-ireland-v
7. https://www.casebriefs.com/blog/law/international-law/international-law-keyed-to-damrosche/chapter-3/fisheries-jurisdiction-united-kingdom-v-iceland/

The post The Doctrine of Rebus Sic Stantibus under International Law appeared first on iPleaders.

This article is written by Arijit Mishra, from KIIT School of Law, Odisha. This article talks about the Trade Dress Protection in India and the US and how goods and services get Trade Dress Protection.

Introduction

Trade Dress refers to a visual appearance of products which includes packaging, shape and combination of colours which can be registered or protected by the competitors in terms of their business and services. It helps the consumers to identify the product and distinguish it from other products. It also helps an illiterate consumer to differentiate the product based on the packing of the product. This concept was first recognised by the US. The new Trade Marks Act 1999 came into force in September 2003 and is largely based on the English Trademark Act, 1994 which recognized the concept of trade dress on the lines of The Lanham Act.

Objective 

Trade Dress protection is meant to protect consumers from packings or appearance of the product that are designed to take other products. It prevents consumers from buying a product with the belief that it belongs to others. The main objective is also to protect the goods and services from copying. It should be distinct from others. It should not create confusion among the minds of the consumers so that there should not be any unfair use of that product.

Essentials of Trade Dress

The essentials of trade dress are-

• It includes shape, size, colour, texture, product configuration etc.
• Packaging of a product is likely to be unique.
• The colour of the product also gives a distinct identity.

Requirements for Trade Dress Registration

The requirements for trade dress Registration of a product are as follows:-

• It must be graphically represented.
• It must be distinct from others.
• It must be used in relation to goods or services from others.
• It must be in a printed form.

Why protect Trade Dress?

Customers buy products because they like them. It is the visual appearance of the product that guides the customers to buy their preferred product. Even educated customers find difficulties in differentiating two similar looking products. Because of these reasons trade dress should be protected. Trade dress should be protected to prevent customers from confusion while they are shopping and also to protect the interests of genuine manufacturers. And the Products should be unique and distinct from other products. 

Trade Dress Protection in India

In India, there is no specific definition of trade dress under Trademark Act 1999. But due to the development in Intellectual Property Laws, a new Amendment recognised trade dress protection through a new definition of a trademark under Section 2 of the Trademark Act. Trade dress is regulated by the laws of unfair competition. Both State and Federal Laws prohibit businesses from duplicity or imitation.

Section 2 of the Trademark Act states that a graphical representation and the overall appearance of a product which distinguishes the goods and services of one person from other persons like the shape of goods, their packaging and combination of colours. 

This section also defines the term “package” and “Mark”.

“Package” includes any box, container, vessel, bottle etc. “Mark” includes a device, brand, ticket, signature etc, shape of goods, the combination of colours.

Before 2003, Indian Courts started recognising the concept of trade dress. The new definition of a trademark under Indian Law consists of all the elements of the trade dress under the U.S law. As a concept, trade dress may include the design of a cover page of a magazine, the visual appearance of a lamp, design of sports shoes, etc. However, a generic idea and a creative concept cannot be treated as a trade dress. Indian Courts have given protection to trade dress through common law remedy- “passing off” (enforcement against an unauthorised use). 

The shape of goods registration of the trademark is stated in the provision of Section 9(3) of the Trademarks Act 1999.

Section 9(3) of the Trademark Act 1999 states that- A mark shall only be registered if it does not consist of:

• A shape of goods which comes from nature.
• A shape which gives substantial value to the goods.

This shows about the Doctrine of Functionality (it prevents a party from obtaining trade dress in the functional feature of a product) which is recognised under Indian Trademark Law. Distinctiveness is also a key aspect under Trademark and Trade Dress as well, which means a trade dress must be distinctive i.e easily recognised by the consumers. Trademark protection is given for both registered and unregistered trademark, this is also same as to trade dress.

Many of the times Courts have given their decisions based on the trade dress factor of a product. The precedents of Indian Judiciary have also established trade dress as an essential aspect of Intellectual Property Protection. Indian Judiciary has recognised features like the shape of the product, combination of colours and packaging of the product as trade dress.

Click Here

Case laws

Colgate Palmolive and Company Vs. Anchor Health and Beauty, 2003

In this case, the dispute was regarding the combination of colour- red and white. The Court held that if the colour of both the products would be same then it will create confusion in the minds of the consumer with regards to the origin of the product. If an illiterate consumer uses another product based on the physical appearance of the product then it amounts to passing off (which is considered as similar to another party’s product, including registered or unregistered trademark).

Cadbury India Limited Vs. Neeraj Food Products,2007

In this case, there was a dispute in the name of JAMES BOND which was similar to GEMS of the Cadbury. The Court held that the word JAMES BOND is physically similar to the registered trademark GEMS of Cadbury. The High Court further held that the packing of Neeraj Foods is also similar to the Cadbury. So Neeraj Foods are restrained from using such packing because it was similar to Cadbury.

Gorbatschow Wodka Kg Vs. John Distilleries Limited, 2011

In this case, both of these were vodka companies. John made the same shaped bottle like Gorbatschow which has a unique bulbous shape inspired by Russian Architecture. The Court held that this shape has a deceptive similarity which can cause confusion in the minds of the consumers. John Distilleries was stopped from using the shape of the bottle for selling their products. 

Parle Products(P) Limited Vs. J.P and Company,1972 

In this case, J.P launched a brand of biscuits which was similar to ParleG. Both the packings of the company’s product looked like having the same colour, similar design and size. The Court held that it has deceptive or misleading similarity, both the packages cannot be kept side by side and cannot be compared. It creates confusion in the minds of the consumers and is not distinct from others. So, the Court’s order was against the J.P and Company which restrained them from using the same colour, design and size.

Steps to Register Trade Dress

• Trade dress can be registered with the USPTO(the United States Patent and Trademark Office) through State registration to get the trademark. 
• You have to show that it is non-functional and it is inherently distinctive. This can be achieved by advertising to promote the product.

Trade Dress Protection in the U.S

In the U.S trade dress protection is stated under Section 43(a) of the Lanham Act which says that trade dress is defined as the overall appearance of the product which may include size, shape, colour combination etc. it is available for both registered and unregistered trade dress (the symbol, word etc. used by the company which is registered under the Trademarks Act 1999 is known as registered trademark and any symbol, word etc. used by the company but is not registered is know as unregistered trademark). For the protection of the trade dress, it should be unique, unusual or widely recognised by the public.

Section 43(a) of Lanham Act provides civil aviation against any person who uses any word or combination of words, term, name, symbol etc. associated with any goods belonging to another which cause confusion. Functional feature of a product is not provided under this act.

Distinctiveness under the U.S law can be classified as- generic, descriptive, suggestive, arbitrary, fanciful. Generic marks cannot be protected under trademark because all the merchants should be equally allowed to use such terms to describe their goods while competing with the customers. Trade Dress is important because it stops the companies from using unfair practices.

Distinctiveness and Non-functionality are the two important criteria for the protection of trade dress in the U.S. It is necessary to follow this criterion for the trade Dress protection, if not compensation should be given to the affected party.

If a plaintiff claims for the infringement, it must prove below the three elements-

• The plaintiff owns a protectable trade dress in a perfect design or combination of elements that is distinctive.
• The accused trade dress creates confusion.
• If the defendant’s trade dress is not registered, then the plaintiff must prove that the trade dress is not functional. If it is registered then the burden of showing functionality lies on the defendant.

The third point mentioned above is interesting and to satisfy it, the trade dress for protection must not be functional. The configuration of shapes, designs, colours does not create any question in the minds of the customers.

If the above three elements for the trade dress are met, then two remedies are available-

• Injunctive relief (the Courts order to stop one party from infringing trade dress of another party)
• Money Damages (compensation for loss suffered by the injured party)

Wal-Mart Stores Vs. Samara Bros Inc, 2000

In this case, Samara had some children’s clothes decorated with appliques and marketed those clothes in the U.S. Wal-Mart and took pictures of that Samara products and also told his suppliers to produce the same. Samara sued Walmart alleging that Walmart had infringed the unregistered trade dress under Section 43(a) of  Lanham Act.

The Court made distinction between packaging and design and also stated that trade dress should be classified as a product design which had a secondary meaning to be entitled for trade dress protection. So, the Court was in favour of Walmart.

The affected party must prove three essentials to recover from trade dress infringements-

1. The trade dress must obtain secondary meaning (potential consumers).
2. The trade dress of the two product are similar and confusing
3. The features of the trade dress are primarily non-functional.

The trade dress infringement relating to passing off has been highlighted by various Courts in the U.S. If the mark and packaging are more distinctive then it will be better to claim protection to trade dress.

Comparative Study of India and the U.S

There is not a lot of difference between the laws of trade dress protection in both of these countries. One of the differences between the U.S trade dress and Indian trade dress is, in the U.S, trade dress gets registered by providing certain conditions, while in India the Trademarks Act does not recognise the term trade dress for which it doesn’t get protection. Certain features like a combination of colours, shape, etc. of the product can be registered. The U.S has an established trade dress protection, but while in India it is still progressing in recognising trade dress protection. But in both countries, they have similar trade dress protection.

Conclusion

Trade Dress protection can also be provided to the shape of the bottle of soft drinks, the shape of the furniture or design of the showroom. Some of the famous trade dress are the shape of a coca-cola bottle, grills of the Rolls Royce car. With growing competitors, trade dress provides a new forum to secure the aspect of distinctiveness. The illiterate consumers can even differentiate the product based on the packaging. The colour of the product also gives a product a distinct identity.

It basically deals with the appearance of the product. It is different from a trademark in a way that trademark deals with words, logos, phrases, emblem etc, which are fixed on that product in order to identify that product from another. Trade Dress is the appearance of the product to identify the producer. Under common law, trade dress may be protected using passing off which provides businesses goodwill.

References

• http://www.mondaq.com/india/x/262928/Trademark/Trade+Dress+Concept+And+Indian+Practice 
• https://legaldesk.com/business/trade-dress-protection-in-india 
• https://www.prometheusip.com/blog/trademarks/trade-dress-an-indian-perspective 
• https://www.upcounsel.com/trade-dress 
• http://www.legalserviceindia.com/legal/article-1239-trade-dress-protection-position-in-u-s-and-india-an-analysis.html 
• https://en.wikipedia.org/wiki/Trade_dress 
• https://corporate.findlaw.com/intellectual-property/trade-dress-the-forgotten-trademark-right.html 
• https://legal-dictionary.thefreedictionary.com/Trade+Dress

The post Trade Dress Protection in India and the US appeared first on iPleaders.

This article has been written by Kavita Chandra, from Vivekananda Institute Of Professional Studies, affiliated to Guru Gobind Singh Indraprastha University, Delhi. She has discussed the meaning, need and relevance of International Law. For better understanding emphasis has also been laid on the difference between International Law and Municipal Law and the sources of International Law.

Introduction

Law is the element of the society which helps to develop a framework within which rights and duties can be established. The world today requires a method where interstate relations can be conducted, and International Law fills this gap. The United Nations developed this body of International Law for the purpose of promoting international peace and security.

Countries come together to make binding rules that they believe will benefit their citizens. International Laws promote peace, justice, common interests and trade. States work together to strengthen International Law because it plays an important role in society. International Law is directly and strongly influenced by the writings of jurists and publicists, instructions to diplomatic agents, important conventions even when they are not ratified, and arbitral awards.

Definition of International Law

According to Oppenheim, International Law is a “Law of Nations or it is the name for the body of customary law and conventional rules which are considered to be binding by civilized States in their intercourse with each other.”

Thus, International Law can be considered as treaties, set of rules and agreements between countries that are binding between them. International Law governs how nations must interact with other nations. It is extremely useful in regulating the issue of jurisdiction which arises when people trade among different States. The main purpose of International Law is to promote justice, peace and common interest.

Relevance and Function of International Law

International Law grew out of necessity. As International engagement increased, International Law expanded. International Law is the most convenient form of regulating world order in the present-day world. International Law aims to maintain international peace and security, which provide for fundamental rights, freedoms and human rights, to refrain the State from the use of threat or force against the territorial integrity of any other State, to provide for the right of self-determination to people, to solve International problems by achieving International cooperation, to use peaceful means for settlement of international disputes.

Click Here

Principles of International Law

International Law is based on the following two principles:

1. Jus Gentium: These set of rules do not form part of a legal statute but mutually governs the relationship between two nations.
2. Jus Inter Gentes: These refer to those treaties and agreements that are accepted by both countries mutually.

International Law provides effective means through which peaceful settlement of disputes can be done. It is mainly concerned with the rights, duties and the interests of the State.

Classification of International Law

International Law can be classified into two groups:

Public International Law

Public International Law is regulated by the treaties and globally accepted norms and customs which are included as State practice and opinio Juris. It regulates the relationship between those nations and peoples that are prone to be affected by a particular law as they are bound by these legal codes and rules.

Private International Law 

It regulates private conflicts between individuals rather than the States. It seeks to resolve disputes in the domestic municipal body which involves an issue revolving beyond its domestic jurisdiction. 

What are the sources of International Law?

The sources of International Law are treaties, custom, general principles of law recognized by civilized nations, judicial decisions and teachings of publicists.

Treaties

The concept of treaty is based on pacta sunt servanda, which is a customary law principle which means promises must be kept. In a treaty, countries create their terms of rights and obligations out of their volition, thus it is very similar to a contract. Therefore, a treaty is a written agreement between two or more States which lays down the manner in which every State would act while doing dealings with other participating States. Sometimes, in place of treaties other terms such as charters, declarations, conventions and statutes are often used. However, there is a slight difference in meaning of these terminologies.

Custom

Custom is one of the primary sources of International Law. In International Law, it is considered to be of particular importance because of its decentralized nature. Two conditions are essential for an act of a State to constitute as custom:

1. The first being the State practice itself, it is not necessary that the act of a State necessarily needs to be positive in nature. State practice should be extensive, uniform and consistent and prevail for at least such a period of time as would establish it as a recognized act of States. 
2. The second essential is opinio juris, which means, the psychological belief of a State that its act is creating a legally obligatory position for itself. But it should be noticed that not every activity of a State would necessarily create binding rules of customary law. For instance, if a particular pattern is used by the State on a particular issue in the General Assembly, it is reflective of the maxim opinio juris.

General Principles of Law

As in International Law there is no cohesive body for legislating laws or any Court that has the power to set precedents, thus it is relatively undeveloped as compared to the Municipal Law. Article 38 of the Statute of the ICJ provides for ‘general principles of law recognized by civilized nations’ as a source of law.

In the Chorzow Factory Case, the general principle of International   Law, it is the duty of a State to make reparations upon the breach of an international obligation, was recognized by the Permanent Court of International Justice. In the Corfu Channel Case, while referring to circumstantial evidence, the ICJ pointed out that ‘in all systems of law indirect evidence is admitted and its use is recognized by International decisions’. The principle of res judicata is too recognised by International Law.

Judicial Decisions

As per Article 38, judicial decisions are recognized as subsidiary means of determination of law. Article 59 of the Statute of the ICJ states that the decisions of the Court can only guide them but does not have any binding value on the Court and the court is authorised to apply the previous decisions of the court which are known as the evidence of International Law. Thus, the doctrine of stare decisis is not followed in International Law. 

ICJ through its case laws, advisory opinions and judges role-play a major role in the law-making process. One of the major examples of this was laid down in the case of Nicaragua vs. USA where the principle of the prohibition against the use of threat or use of force was recognised. This principle is now considered to be a part of Customary International Law.  In another case, that is, Alabama Claims arbitration, ICJ gave recognition to the peaceful settlement of international disputes. In this, judicial and arbitration methods were used in resolving conflict.

Writings of the Publicists

As per Article 38, teachings of the highly qualified writers of International Law such as Gentili, Grotius, and Vattel are considered as the subsidiary means of determination of law. The role of the writers is extremely significant in providing a structure and coherence in the field of International Law. Textbooks are used as a method of discovering law on any particular point and law cannot be created even by the writings of the most respected International Lawyers. As they provide an understanding and explanation of the principles of International Law these are considered as an evidentiary source of law. 

Can International Law be termed as a true law?

There has been a lot of controversy regarding this question. Some answered the question in negative while others in the affirmative. Some feel that International Law lacks the element of certainty, stability and predictability.

Not a true law 

John Austin, a leading English writer on Jurisprudence supports the view that International Law is not a law. As per him, International Law is a code of moral force and rules of conduct only. In his opinion, International Law does not have any sanction behind it and it doesn’t emanate from a law giving authority. He described International Law as the one consisting of positive International morality and opinions or sentiments which are followed by the nations as per their own wish.

Hobbes and Pufendorff are also of the view that International Law is not a true law as the law is not truly invested with true legal force and it is not backed by the command of a superior.

Holland is of the view that International Law is extremely different from ordinary laws as it is not supported by the State’s authority. As per him, the private law is writ large. He describes International Law as the vanishing point of Jurisprudence. He is of the view that as International   Law lacks sanction (which is the most important element of Municipal Law) it can not be kept in the category of true law. 

A true Law

Hall And Lawrence consider International Law as true law. According to them, International  Law is derived from custom and precedents which are a source of law and it is habitually treated like a certain kind of positive law.

Sir Frederick Pollock observed that for International Law to be binding upon the members,  the only essential conditions are the existence of political community and the recognition by its members of settled rules binding upon them in that capacity. International Law wholly satisfies these conditions. 

What is the difference between International Law and Municipal Law?

The basis of both laws is different in many ways.

• Firstly, International Law is majorly concerned with the relation among States. Whereas Municipal Law controls the relationship between individuals and the State and between the individuals within a State.
• Secondly, in the case of International Law, the law is not above the individuals but between the sovereign States and the States themselves create the law. In International Law, the States often disobey the laws or create laws as per their interests. Whereas in the case of Municipal Law, the law is deemed to be above the individuals, as is the case with the laws of most of the countries, the law is deemed to be above individuals. 
• Thirdly, the sources of both laws differ. Article 38 of the Statute of the ICJ is considered as the most authoritative statement of the sources of law for the Public International Law. It states the sources of law such as customs, conventions, treaties, general principles of law recognized by civilized nations and judicial decisions and teachings of highly qualified publicists. Whereas in the case of Municipal Laws there is a hierarchy of laws which determines, which legal commandment is more authoritative than others. For instance, in many countries, a hierarchy of courts is established wherein the judgments of higher courts are of more authoritative value and thus are relied upon by the lower courts.

Conclusion 

International Law is a set of rules which are necessary in order to regulate the behaviour of nation-States towards each other so as to ensure peace and welfare of the International community. It helps in resolving disputes amongst States. International Law may influence internal laws too and may become a part of domestic law.

It is not necessary for International   Law to be codified into an agreement. There have been a lot of developments in the Modern International Law and the International Court of Justice is considered as the principal body responsible for upholding the tenants of International Law.

References

1. https://legalcareerpath.com/international-law/
2. https://www.academia.edu/27871613/PUBLIC_INTERNATIONAL_LAW_LECTURE_NOTES
3. https://www.justia.com/international-law/
4. https://www.un.org/en/sections/issues-depth/international-law-and-justice/index.html

The post Nature and Definition of International Law appeared first on iPleaders.

This article has been written by Rutuparna Sahu from KIIT School of Law, Odisha. This article talks about the Express and Implied Warranties under the Sale of Goods Act.

What is the warranty?

A Warranty is a condition present within a contract between parties, it comes into action the moment the condition is not satisfied or fulfilled by either of the parties. It is stipulated as collateral for the main deal. 

Section 13 of The Sale of Goods Act tells when a condition is to be treated as a warranty.

The conditions are as follows  :

• In a contract of sale, if any matter is subjected to a condition that is to be satisfied by the seller, the buyer is entitled to waive the condition at any time if there is any breach of contract on the part of the seller. The buyer can treat the breach as a breach of warranty but cannot reject the acceptance of the goods by the way of repudiation. 
• In a contract of sale, where the sale is without a severability factor and the buyer accepts the goods or its parts, the breach of any condition from the seller’s part will lead to a breach of warranty and the waiving of the warranty isn’t applicable on the grounds of repudiation by rejecting the goods after acceptance unless there is an implied or expressed condition stated before in the contract.
• Nothing contained in this Section shall affect the fulfilment of a warranty or the condition of the contract by any Act that has already been excused by the law because of impossibility or otherwise.

In addition to this, any kind of breach of warranty leads to a claim for damages but not to be misinterpreted with repudiation under Section 12 (3) of the Sale of Goods Act. 

There are two main types of warranties, that are :

• Express Warranty
• Implies warranty

Express Warranty

An express warranty covers the part of contracts that is done expressly by ways of speaking or writing. In addition to that, this kind of warranty expressly comes with a guarantee of reliability and to meet a certain level of credibility of a particular product. If there is a problem pertaining to the product, the manufacturer needs to fix it anyhow without charging an additional cost. These are often used for the purpose of reference as it is a written form of the conditions concerning the contract.

The seller warrants the buyer in various ways

• If any expressed statement of promise is made to the customer in a form of warranty in the context of the good’s quality or any other criteria by the seller, it needs to be true to the facts. 
• In case of any description made against a particular good to the buyer has to be true to the facts regarding the good in the form of warranty.
• Any sample or model showcased in order to promote the particular good has to be real to the facts as stated by the seller in a form of warranty.

A seller does not create the warranty just by a declaration. He may not choose to use any kind of explicit language to give a guarantee against the goods. However, it is difficult to acknowledge the seller’s intention in the context of selling the goods unless he expressly states about the credibility of the goods. A warranty is not merely created by means of a statement made by the seller against the good’s credibility or by the seller’s estimation regarding the product. 

Generally, during the course of a contract, the statements made by the parties are treated as statements of fact and as above stated unless there is an express statement, it is difficult to draw out any kind of opinion regarding the product whether to buy or not. 

Generally, products come with the terms and conditions applied against them from inception. So it gets easy for both manufacturers and buyers as well. 

Illustration 

For example, if a scooter dealer describes a scooter’s mileage to its customer of running about 55 km/lt and the scooter shows the exact mileage warranted by the dealer then there is no breach of express warranty but if it does not show the mileage as warranted by the dealer then it definitely is a breach of express warranty.  

Implied warranty

An implied warranty in the law of contract is solely based on presumption. Unlike express warranty, the guarantee is being served in ways of assurance by the ongoing circumstances involved in due course of the contract. A seller assures in detail about the good which the buyer is going to receive. These assurances take a form of warranty as there is hardly any other expression made for the required conditions to be fulfilled. These types of warranties are still considered even if it is not promised in any means of writing or orally. 

There are two types of implied warranty :

• The implied warranty of merchantability.
• The implied warranty of fitness for a particular purpose.

Click Here

Implied warranty of merchantability 

Warranty of merchantability is considered to be an implied warranty unless it is expressly stated somewhere with the tag of “to be merchantable”. Besides that, it needs to satisfy the basic criteria of genuinity i.e, the product needs to reasonably conform to the expectation of any ordinary buyer.

As the implied warranties are fully based on presumption, the buyer usually presumes the merchant’s warranty against the product’s credibility and inculcates a perception about the product as it has been showcased to the buyers. And talking about the merchant’s warranty, the merchant only guarantees the minimum credibility of the good. 

There are certain rights given to the merchant for the sale of its goods under Section 14:

• In a contract of sale, the merchant has a right entitling him to sell the goods and in case of an agreement to sell, he is entitled to sell the goods when the goods are ready to be passed into the market. 
• The processed goods come with an implied warranty assuring the buyer to enjoy it by possessing the particular good.
• It’s the merchant’s job to make the goods free from any encumbrances which are in favour of a third party not known to the buyer before or at the time of contract made.

No household goods that are being sold to the consumers can be disclaimed with a merchantable warranty under the provision of Massachusetts Consumer Protection Law. 

Illustration 

As a mosquito repellent manufacturing company claims to kill dengue mosquito but B a buyer buys the product and was still found dengue positive which concludes that there was a breach of warranty of merchantability by the seller. 

Implied warranty of fitness for a particular purpose

In case of an implied warranty of fitness for a particular purpose, the buyer here is totally dependent on the seller’s work and skill to furnish the goods. The buyer basically tries to make things their way for a particular purpose. And this involves a warranty from the seller’s side that the goods produced will fit for a particular purpose. And when we talk about any particular product or good, it just sticks to the usage by the buyer and no way attached to the products’ business.

Certain provisions under the Sale of Goods Act about the implied conditions as to quality or fitness under Section 16 :

• The buyer expressly or impliedly informs about the necessity of a product for a particular purpose to be fulfilled by the merchant and here the buyer totally relies upon the merchant’s skill or judgment for work. The goods are to be of a description as described in the course of the merchant’s business to supply. The good comes with an implied warranty of being fit for the purpose.
• The goods required for the particular purpose need to be bought from a merchant which deals with the articles of the same description as required for the purpose with a condition that the goods need to be merchantable. If in case the good has gone through an examination and is checked properly by the merchant himself and no such fault could be found which could have been faced by the buyer in near future, the seller is not bound to give any implied warrant for the same.
• Nothing contained in this Section is an express condition or warranty that negates the implied warranty or condition.

Illustration 

X a medicine manufacturing company dealing with a variety of medicines produced medicine for patients suffering from migraine. B, a migraine patient takes it and gets an adverse side effect by the consumption of the particular medicine which means that it isn’t fit for the group of people suffering from migraine and hence, it is concluded to be the breach of warranty of fitness for a particular purpose. 

Breach of warranty

Even if express and implied are two different types of warranties, they can be breached in a similar manner. So if there is any kind of breach against the buyer then the buyer has certain rights which are as follows :

• The buyer has an explicit right to reject or revoke the contract of buying of goods if there is any breach of the contract against the goods. The buyer can anytime reject to accept the nonconforming goods and any nonconforming good that violates the conditions of the contract in any way, gives the right to the buyer to cancel the whole contract.
• The buyer is entitled to recover any damages incurred by purchasing substitute goods, and by the difference between the market price for the substitute goods and the contract price. 
• If a buyer accepts a nonconforming good but in result incurs damages then the buyer can claim and recover monetary compensation for the breach of warranty but the buyer has to give a notice in this context within a reasonable time. Having said that, the compensation for damages is being measured by the difference between the goods accepted by the buyer and the value that would have been if it was warranted. 
• If there is a failure on part of the seller, the buyer has the same right to claim compensation for any incidental losses.

Cases breaching warranty 

• In this case of Jacob and Youngs, Inc. Vs. Kent, the plaintiff ( Jacob and Youngs ) was the builder of Kent’s ( defender ) house made the piping system using Cohoes Rolling Mill company’s pipes instead of Reading Iron company’s pipes which breached the conditions of the contract. The defendant then asked the plaintiff to exchange the pipes with the Cohoes pipes and build it again to which the plaintiff disagreed and filed a suit against the defendant for compensation of the remaining balance that has not been satisfied because the defendant did not pay them for the building. First, the Court ruled in favour of Kent which got reversed on appeal and then the plaintiff was eligible for the rest of the payment and did not have to replace the pipes. 
• In the Johnson and Johnson cancer case, a lady claimed that there was an asbestos chemical present in the Johnson and Johnson’s talcum powder which caused cancer and in addition to that, there were many complaints regarding ovarian cancer as well. The court in its verdict said that the lady was using the powder since her childhood so the powder wasn’t fully in fault but yes the company did not warn its customers about the adverse effects of using this powder so the lady was compensated with an amount of $29m by the Johnson and Johnson company. 

Conclusion 

From the above facts, we can derive that a warranty can be simplified as a guarantee. Which a seller has to prove to the buyer beyond all reasonable doubts because, in the end, it’s the buyer who is going to buy the goods of the manufacturer or merchants. So it’s important for the sellers to not to violate any of the conditions of the contract in which he is a party with the buyer. And buyers should not misuse the powers given to him by giving it a form of repudiation. 

References 

• https://indiankanoon.org/doc/1541687/ 
• https://www.lawteacher.net/free-law-essays/commercial-law/Section-12-of-sale-of-goods-Act-commercial-law-essay.php 
• https://www.lexisnexis.com/community/casebrief/p/casebrief-jacob-youngs-inc-v-kent 
• https://www.theguardian.com/us-news/2019/mar/14/woman-awarded-29m-in-damages-in-johnson-johnson-cancer-case 
• https://www.mass.gov/service-details/the-massachusetts-consumer-protection-law 
• http://www.legislation.gov.uk/ukpga/1979/54

To know more about conditions and warranties, please Click Here.

The post Express and Implied Warranties under the Sale of Goods Act appeared first on iPleaders.

This article has been written by Chandan Kumar Pradhan, from KIIT School of Law, Odisha. This article talks about the various types of transfer of property under the Transfer of Property Act, 1882.

Introduction

Section 5 of the Transfer of Property Act, 1882 defines that, the property will be delivered by a living person to one or more other people in the present date or in future times or to himself only. The expression mentioned above “in present or in future” is deriving the meaning of the word ‘deliver’. There will be no transfer of future property. The transferee needn’t be a competent person like a transferor. A transferee can also be a minor, insane or child in a mother’s womb.

In this section “living person” includes “companies, private associations, which are registered or not, but nothing in this section affects the law while doing the transfer of property to any company or association or individual body”.

Kinds of transfer

Subsequent forms of transfer under the Act are: 

• Sale– It’s an out-and-out transfer of property And also the consideration is money.
• Mortgage– It’s a transfer of a limited interest during a property.
• Lease– A lease may be a transfer of a right to enjoy the immovable property for a particular time.
• Exchange– It’s the same as sale, but differ in consideration. Here the consideration is another thing not money.
• Gift– Here, there’s no consideration.

Which is not amounting to the transfer of property?

Another meaning of transfer of property is “Conveying the property”. A fresh interest within the mind of the transferee, if new interest has not been created in mind of the transferee, the property can not be said to be conveyed, thus no transfer of property is finished.

1. Partition- When two blood relatives like brother and brother dividing their property between themselves is called partition. And it can’t be transfer of property because that property was already in their own possession and no new property is created.new is formed by co-sharer on the partition, it’s not a transfer of property. His specific share, which settled in him earlier, is just separated.
2. Relinquishment (sacrifice)- Here, there is nothing to transfer, because in this, the successor who was the owner of that property, he sacrificed that property to his/her closet person, the transferee may be one or more then one. Therefore, those who got the profitable property they can enjoy over that.
3. Surrender- A transferor has a contract to transfer some property with a minor. But, if the guardian of the minor has a condition with another person then it will not be a transfer of property.
4. Easement- The creation of an easement doesn’t amount to a transfer.
5. Will- Because it comes from the death of the person making it, while the definition of transfer is for the future by a living person, it doesn’t come under the definition of transfer.
6. Compromise- It depends on the facts and circumstances of every case. It may or might not amount to transfer.
7. Family arrangement/settlement- Any family problem arises about their property, then if a third person came and solved that problem and put an end to the disputes is not amounting to transfer of property.

What is also transferred?

Section 6– “ Any types of property which can be additionally transferred, except provided by this act or by any other law for nowadays in effect”. 

This section specifies different types of property which can not be transferred (Exception to Section 6)-

1. Spes Successionis [Section 6(a)]- “The possibility that an heir apparent is clearly unsuccessful in a certain situation, that the possibility in a relationship, receiving an ancestral property by the death of an ancestor or in another natural event, then the transfer can not be performed.”

Any opportunity for the heir apparent to succeed under certain conditions is not included in the category of assets that can be transferred. 

For e.g, ‘X’ a Hindu, dies and leaves his wife with ‘C’. ‘C’ has only a spes succession, his succession depends upon two factors, that the surviving of the X’s wife and the property which was left by ‘X’.

• Right of Re-entry [Section 6(b)]- “A simple right of re-entry for breach of a condition following can not be transferred to anyone except the owner of the property.”
• Easement [Section 6(c)]- “An easement can not be transferred except from the dominant heritage.”

An easement right to use, or restrict the utilization of land of another in their way, for example- the right of way, right of water or light, etc. (Section 3 Easement Act).

• Restricted Interest [Section 6(d)]- “A right of the owner is strictly prohibited in its enjoyment to him or her personally can not be transferred to any other.”

E.g- A man can not transfer the right of enjoyment of the home to any different person. If the home is lent to the man for his personal use.

• Maintenance [Section 6(d)]– “A right of a person to his future maintenance, in whatever manner it would arise, that should be secured or determined, and can not be transferred to anyone.”
• Mere right to sue [Section 6(e)]- “A mere right to sue can not be transferred to anyone.”

A right to sue is a personal possibility for the injured..

• Public office [Section 6 (f)]- “A public office cannot be transferred to anyone because, it’s a public property and the person who has the qualities, they should only enjoy the rights of the office not all. And always changes and pays for work not for the office.”
• Pensions [Section 6(g)]- “Stipends are allowed only for the military, air force, naval and civil pensioners of the govt. and political pensions that can not be transferred to anyone, pension means a periodical allowance or stipend which they will get after their job is over.
• Nature of Interests [Section 6(h)]- “There is no transfer on this point because it against the nature of the interest affected thereby, or as far as unlawful object or consideration within the meaning of Section 23 of the Indian Contract Act, 1872, or to someone who is legally disqualified to be a transferee.”

This clause restricts the transfer with anyone which is in nature and isn’t transferable, e.g- res communes (things are also utilized by all men, which nobody specifically is the owner), res nullius (things belonging to nobody).

• Untransferable interests [Section 6(i)]- “In this section it is not mentioned that, to authorize a tenant it is compulsory to have an non-transferable right of occupancy, like the farmer has a condition to pay the revenue, in which there are some conditions are also on the lessee, under the supervision of a Court’s department”.

When a person competent to transfer?

Section 7 of the Act provides that, “the person who is allowed to sign a contract is also allowed to transfer a property and then he will be allowed to enjoy the property wholly after it takes place. Legally permitted and determined for the time being in force.”

These are some persons can be competent to transfer:

Competent to contract, sound mind, the transferor must be entitled to transferable property.

Operation of transfer

Section 8 of the Transfer of Property Act provides transfer of various types of property and their legal incidents. It means that “A transfer of property passes to the transferee with all the interest which the transferee is then capable of using the property in his/her future within the all legal incident.”

In any situation, where the property is related to land or the property is rented, then the transferor and transferee should make a plan about the outcomes of the property which will be generated after the transfer takes place. After that, there will be no problem arising in the future and if the property generates money, then the income can be calculated after the transfer takes place.

Section 6(a) of the Act provides certain rules which are non-transferable (spes succession). These are as follows-

• The possibility of a person who is most likely to get the ancestral property after his or her ancestor’s death under certain situations.
• The probability of a relationship obtaining a legacy(gift) on the death of a blood relative.
• Another mere possibility from nature.

• Chance of an Heir Apparent

The expectation forbids both Hindu Law and Muslim Law. A mere possibility of an heir succeeding to a condition is eliminated from the class of transferable property. A Hindu successor has no right. In presents within the property which the female owner holds forever for her life.

• Chance of Legacy(gift)

The chance of getting a gift has more possibility of being non-transferable than getting the ancestor’s property as a legal heir.

• Chance of nature

This rule has more possibilities of being non-transferable than the other two, which are mentioned above.

E.g- The chance of winning a prize from a certain competition, which cannot be transferred in the property.

Transfer by an unauthorised person(Doctrine of feeding empty grant by Estoppels)

A person, who has no right to transfer any immovable property, cannot transfer that property. Transfer by such person will be called the transfer by an unauthorized person.

Section 43– Transfer by unauthorized persons means, where someone fraudulently shows that he’s authorized for the transfer of certain immovable property and declares to transfer such property for consideration such transfer shall at the choice of the transferee.

E.g,- ‘X’, the son of ‘Y’. ‘X’ has separated from his father. ‘X’ sells 4 fields to ‘Z’ that ‘A’, ‘B’, ‘C’, ‘D’, representing that he is authorized to transfer the same. From these fields ‘C’ does not belong to ‘X’, it has been retained by ‘Y’ on the partition. But on Y’s dying ‘X’ as heir obtains ‘C’. ‘Z’, not having revoked the contract of sale, may require ‘X’ to deliver ‘C’ to him.

The general rule of Nemo dat quod non-habet (no one can give to different person, what he himself doesn’t have the rights)has been relaxed through this section,

For the applying of this section following must be satisfied:

• There must be a fraudulent representation of ownership by the transferor.
• Transfer must be by the incorrect owner.
• The transferee must act on it false representation in good faith.
• The transfer is for consideration.
• The property which someone professed to transfer subsequently acquires some interest in that property.
• The contract of transfer still subsists.

Subsequently acquired interest doesn’t pass automatically to transferee but only if he claims right in such property.

The exception to the present section protects the rights of the record transferee in good faith and also the consideration who has no notice of the choice in favour of the primary transferee.

A legal question on Transfer of Property Act, 1882

Can you transfer a property you are going to inherit?

Legally, a son, who is hoping to inherit the property of his father can not transfer his rights of this property to any other person, till his father is alive. If a person promises to transfer his right over his future property to someone else when he will get the ownership, the contract between those two parties will be void. However, you can never make a contract to gift a property which you are hoping to get in future. Transfer of your future property as a gift without receiving any consideration will be void.

Conclusion

Section 6(a) and Section 43 have some problems with each other. Where Section 6(a) deals with spes successionis and defined that which property are untransferable property and which are not, whereas Section 43 deals with the unauthorized transfer of property, in such transfer very big problem will arose on behalf of transferee because the transferee had no idea that the property is unauthorized and the transferee will take that property in good faith which is wrong.

In this Act, if a transferor wants to transfer anything then he or she has to think clearly about the possibility of doing something which he has to sought to be conveyed to the transferee about the property.

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:

The post Kinds of transfer of property under Transfer of Property Act, 1882 appeared first on iPleaders.

This article has been written by Neha Mallik from VIPS, Delhi. This article talks about everything you need to know about the concept of Condition and Warranty in the light of Sale of Goods Act, 1930.

Overview

The contract of sale of goods is a special type of contract and has a huge application in the business world. These contracts are governed by the Sale of Goods Act 1930, which was earlier part of the Indian Contract Act, 1872. Because of the wide use of the contract of sale of goods, a special enactment was necessary but despite the separate legislation, the law has its root in the Indian Contract Act, 1872. Both the laws are complementary to each other,  thus the basic provisions of the Indian Contract Act are applicable to the contracts of sale. 

Whenever we buy any goods like electronic gadgets etc, we are concerned about the warranty periods. We ask the seller about the warranty to make sure that even if the product is found to be faulty after purchase we can easily get the product replaced or repaired. The terms “Condition” and “Warranty” are set out in the contract of sale in order to determine remedies the parties can claim in case of the breach by either of the parties. Here in this article, we will see the manner how these terms are defined, their differences and their legality in the light of Sale of Goods Act, 1930. 

Definition

Certain provisions need to be fulfilled as demanded in the contract of sale or any other contract. The condition is a fundamental precondition on the basis of which the whole contract is based upon, on the other hand, warranty is the written guarantee wherein the seller commits to repair or replace the product in case of any fault in the product. Section 11 to 17 of the Sale of Goods Act enlightens the provisions relating to Conditions and Warranties.

Section 12 of the Act draws a demarcation between a condition and a warranty. The determination of condition or warranty depends upon the interpretation of the stipulation. The interpretation should be based on its function rather than the form of the word used.

Condition

In the context of the Sale of Goods Act, 1930, a condition is a foundation of the entire contract and integral part for performing the contract. The breach of the conditions gives the right to the aggrieved party to treat the contract as repudiated. In other words, if the seller fails to fulfil a condition, the buyer has the option to repudiate the contract or refuse to accept the goods. If the buyer has already paid, he can recover the prices and also claim the damages for the breach of the contract. 

For example, Sohan wants to purchase a horse from Ravi, which can run at a speed of 50 km per hour. Ravi shows a horse and says that this horse is well suited for you. Sohan buys the horse. Later on, he finds that the horse can run only at a speed of 30 km/hour. This is the breach of condition as the requirement of the buyer is not fulfilled. The conditions can be further classified as follows.

Click Here

Kinds of conditions 

Expressed Condition 

The dictionary meaning of the term is defined as a statement in a legal agreement that says something must be done or exist in the contract. The conditions which are imperative to the functioning of the contract and are inserted into the contract at the will of both the parties are said to be expressed conditions. 

Implied Condition

There are several implied conditions which are assumed by the parties in different kinds of contracts of sale. Say for example the assumption during sale by description or sale by sample. Implied conditions are described in Section 14 to 17 of the Sale of Goods Act, 1930. Unless otherwise agreed, these implied conditions are assumed by the parties as if it is incorporated in the contract itself. Let’s study these conditions briefly:

• Implied condition as to title

In every contract of sale, the basic yet essential implied conditions on the part of the seller are that-

1. Firstly, he has the title to sell the goods.
2. Secondly, in case of an agreement to sell, he will have the right to sell the goods at the time of performing the contract.  

Consequently, if the seller has no title to sell the given goods, the buyer may refuse or reject those goods. He is also entitled to recover the full price paid by him. 

In Rowland v. Divall (1923), the party bought a second-hand motor car from the former and paid for the same. After six months, he was deprived of it as the seller had no title to sell the car. It was held that the aggrieved party is entitled to recover the money. 

• Implied condition as to the description

Moving to  Section 15 of the Act, In the contract of sale, there is an implied condition that the goods should be in conformity with the description. The buyer has the option to either accept or reject the goods which do not conform with the description of the good. Say for example: Where Ram buys a new car which he thinks to be new from “B” and the car is not new. Ram’ can reject the car. 

Referring to Section 16(2) of the given Act, goods must be of merchantable quality. In other words, the goods are of such quality that would be accepted by a reasonable person. For eg: A purchased sugar sack from B which was damaged by ants. The condition of merchantability is broken here and it is unfit for use. It must be noted from this section that the buyer has the right to examine the goods before accepting it. But a mere opportunity without an actual examination would not suffice to deprive the buyer of his rights. If however, the examination does not reveal the defect but within a reasonable time period the goods are found to be defective, He may repudiate the contract even if he approves the goods.

The implied conditions especially in case of eatables must be wholesome and sound and reasonably fit for the purpose for which they are purchased. For eg: Amit purchases milk that contains typhoid germs and because of its consumption he dies. His wife can claim damages. 

• Implied condition as to sale by sample

In the light of Section 17 of the Act, in a contract of sale by sample, there may be following implied conditions:

1. That the actual products would correspond with the sample with respect to the quality, size, colour etc. 
2. That the buyer gets a reasonable opportunity to compare the goods with the sample. 
3. Further, the goods are free from any defect rendering them unmerchantable. 

For example, A company sold certain shoes made of a special kind of sole by sample sale for the French Army. Later when the bulk was delivered it was found that they were not made from the same sole. The buyer was entitled to the refund of the price and damages. 

• Implied condition as to Sale by sample as well as a description

Referring to Section 15 of the Sale of Goods Act, 1930, in a sale by sample as well as description, the goods supplied must be in accordance with both the sample as well as the description. In Nichol v. Godis(1854),  there was a sale of foreign refined rape-oil. The delivered oil was the same as the sample but it was having a mixture of other oil too. It was held in this case that the seller was liable to refund the amount paid. 

Warranty 

Warranty is the additional stipulation and a written guarantee that is collateral to the main purpose of the contract. The effect of a breach of a warranty is that the aggrieved party cannot repudiate the whole contract however, can claim for the damages. Unlike in the case of breach of condition, in the breach of warranty, the buyer cannot treat the goods as repudiated.  

Kinds of Warranty

Expressed Warranty 

The warranties which are generally agreed by both the parties and are inserted in the contract, it is said to be expressed warranties. 

Implied Warranty

Implied warranties are those warranties which the parties assumed to have been incorporated in the contract of sale despite the fact that the parties have not specifically included them in the contract. Subject to the contract, the following are the implied warranties in the contract of sale:

• Warranty as to undisturbed possession

Section 14(2) of the given Act provides that there is an implied warranty that the buyer shall enjoy the uninterrupted possession of goods. As a matter of fact, if the buyer having got possession of the goods, is later disturbed at any point, he can sue the seller for the breach of warranty. 

For eg: ‘X’ purchased a second-hand bike from ‘Y’. Unknown to the fact that the bike was a stolen one, he used the bike. Later, he was compelled to return the same. X is entitled to sue Y for the breach of warranty.

• Warranty as to freedom from Encumbrances

In  Section 14(3), there is an implied warranty that the goods shall be free from any charge or encumbrances that are in favour of any third party not known to the buyer. But if it is proved that the buyer is known to the fact at the time of entering into the contract, he will not be entitled to any claim.

For eg: A pledges his goods with C for a loan of Rs. 20000 and promises him to give the possession. Later on,  A sells those goods to B. B is entitled to claim the damages if he suffers any.  

• Implied warranty to disclose Dangerous nature of the goods sold

If the goods sold are inherently dangerous or likely to be dangerous and the buyer is not aware of the fact, it is the duty of the seller to warn the buyer for the probable danger. If there would be a breach of this warranty, the seller will be liable. 

For eg: A purchases a horse from B if the horse is violent and then It is the duty of the seller to inform A about the probable danger. While riding the horse, A was inflicted with serious injuries. A is entitled to claim damages from B.

Difference between Condition and Warranty

When does Condition sink to the level of Warranty?

Section 13 of the Act specifies the cases wherein a breach of Condition sink to the level of breach of Warranty. In the first two following points, it depends upon the will of the buyer, but the last one is compulsory and acts as estoppel against him:

1. When the buyer waives the condition, the condition is considered a warranty.
2. A condition would sink to the level of warranty where the buyer on his own will treat the breach of condition as a  breach of warranty.
3. Wherein the contract is indivisible and the buyer has accepted the whole or part of goods, the condition is treated as a warranty. Consequently, the contract cannot be repudiated. However, the damages can be claimed. 

Conclusion

At the time of selling or purchasing goods, both the buyer and seller put forth some preconditions with regards to the mode of payment, delivery, quality, quantity and other things necessary. These stipulations are either considered as condition or warranty differing from case to case. These concepts are necessary to be understood as it protects the rights of parties in case of breach of the contract. 

References 

• Sale of Goods Act, 1930
• Indian Contract Act, 1872
• http://www.e-lawresources.co.uk/Rowland-v-Divall.php
• https://keydifferences.com/difference-between-condition-and-warranty.html

The post Concept of Condition and Warranty under the Sale of Goods Act appeared first on iPleaders.

This article is written by Sangeet Kumar Khamari, KIIT School Of Law, Odisha. This article talks about what relationship a seller and buyer should have when a contract is made for the sale of a good. And also talks about the rights of an unpaid seller.

Introduction

The Sale of Goods Act 1930, was a part of the Indian Contract Act 1872 and got separated from it on 1 July 1930. This was applicable for the whole of India except the state of Jammu and Kashmir, but now it is also applicable on Jammu and Kashmir after it was declared as Indian territory in 2019. Earlier in the period of 1930, The Sale of Goods Act was “The Indian Sale of Goods Act” later in 1963 on 23 September the act was amended and named as “The Sale of Goods Act 1930”. It is still applicable in India after being amended in 1963.

According to the Sales of Goods Act 1930, the performance of the contract of sale comes under chapter IV from Section 31 to Section 44 it is described how the goods are being displaced and how their possession are being transferred from one person to another voluntarily. There are basically two parties for the agreement, one is the seller and the other one is the buyer. The seller sells the goods and the buyer buys the goods. There are some criteria on the basis of selling and buying which takes place, which we are going to discuss in this article.

Who is a seller

The definition of the seller is given in Section 2(13) of the Sale of Goods Act, 1930. The seller can be defined as a person who agrees to sell goods.

Rights of the Seller (Section 31)

• He can reserve the rights of the goods until and unless payment of goods is done. 
• He can assume that the buyer has accepted the goods or not.
• He will only deliver the goods when the buyer would apply for the delivery.
• He can make the goods delivered in instalments when so agreed by the buyer.
• He can have the possession of the goods until the buyer hasn’t paid for the goods. 
• He can stop the delivery of goods and resume possession of the goods unless and until the payment is done for the goods.
• He can resell the goods under certain conditions.
• He can bring the goods back if it is not delivered to the buyer.
• He can sue the buyer if the buyer fails to make the payment on a certain day, in terms of the contract.

Duties of seller

• He should make an arrangement for the transfer of property to the buyer.
• He should check whether the goods are delivered properly or not.
• He should give a proper title to the goods which he has to pass to the buyer.
• He should deliver the goods according to the terms of the agreement.
• He should ensure that the goods supplied should be agreed to the implied condition and warranties.
• He should keep the goods in a deliverable state and deliver the goods when the buyer asks for it.
• He should deliver the goods within a specific time fixed in the contract.
• He should bear all the expenses for which the good should be delivered.
• He should deliver the goods as said by the buyer in the contract in an agreed quantity. 
• To deliver the goods in instalments only when the buyer wants.
• He should make arrangements for the goods while they are in the custody of the carrier.

Who is a buyer?

The definition of the buyer is given in Section 2(1) of the Sale of Goods Act, 1930. The buyer can be defined as a person who buys goods from the seller.

Rights of the Buyer (Section 31)

• He should get the delivery of the goods as per contract.
• He can reject the goods if the quality and quantity are not as specified in the contract.
• To deny the contract when goods are delivered in instalments without any agreement to the effects.
• The seller should inform him when the goods are to be sent by sea route, so that the buyer may arrange for their insurance.
• He can examine the goods for checking whether they are in the agreement with the contract.
• If he has already paid he can sue the seller for recovery of the price if the seller fails to deliver the goods.
• He can also sue the seller for damages or the seller’s wrongful neglect or the seller refuses to deliver the goods to the buyer.
• He can sue the seller for damages for breach of a warranty or for breach of a condition.
• He can sue the seller for the damages of breach of contract.

Duties of the Buyer

• He should accept the delivery of goods when the seller is prepared to make the delivery as per the contract.
• To have possession on it he should pay the price for the goods as per the contract.
• He should apply for the delivery of the goods.
• He can ask to deliver the goods at a particular time.
• He should accept delivery of the goods in instalments and pay for it according to the contract.
• He should bear the risk of failure of delivery of goods if the delivery point is a distant place.
• He should pay the price on the transfer of possession of the goods as given in the term of the contract.
• He has to pay for not accepting the goods.

Delivery

Section 33 of the Sale of Goods Act, 1930 defines delivery as a voluntary transfer of possession from one person to another. It is also the process of transporting goods from a source location to a predefined destination. Cargo (physical goods) are primarily delivered via roads and railroads on land, shipping lanes on the sea and airline networks in the air.

The basic elements of delivery are:

• There must be two parties.
• One party out of those two parties should have the possession of the goods.
• One party should transfer possession to the other.
• This should be done voluntarily.

Mode of delivery

• When the seller transfers the possession of the goods to the buyer or to a person who is authorised on behalf of the buyer its called physical or actual delivery. 
• If the actual delivery is not done and only the control of the goods is transferred, then it is called symbolic delivery. In this case, neither physical nor symbolic delivery is made.
•  In constructive delivery, the individual possessing the products recognizes that he holds the merchandise for the benefit of, and at the disposal of the purchaser. Constructive delivery is also called attornment.

Constructive delivery may be effected in the following three ways.

• Where the seller, after having sold the goods, agrees to hold them as bailee for the buyer
• Where the buyer, who is already in possession of the goods as bailee of the seller, holds them as his own, after the sale, and
• Where a third party, for example, a carrier/transporter, who holds the goods, as bailee for the seller, agrees and acknowledges holding them for the buyer.

Click Here

Rules regarding delivery

• The delivery and payment of price are concurrent conditions unless the two parties agree.
• If the intention of the seller is to deliver the goods in parts then the delivery is called a valid delivery. But if goods are delivered in parts and the seller is not intending to contract fully then there is a breach of contract.
• If a part-delivery of the goods is made in progress of the delivery of the whole, then it has the same effect for the purpose of passing the property in such goods as the delivery of the whole. However, a part-delivery with the intention of severing it from the whole does not operate as the delivery of the remainder (Section 34). 
• According to Section 35 of Sale of Goods Act 1930 unless there is a contract to the contrary then the buyer must apply for delivery. But if it is mentioned in the contract that the seller has to deliver the goods then the seller has to deliver without the permission of the buyer.
• If no place is decided for the delivery of the goods that, they are to be delivered at a place at which the seller and the buyer are in the time of sale.
• There should be an appropriate time for the delivery.
• The expenses of delivery are to be carried out by the seller unless there is a contract to the contrary.

If the seller delivers the wrong quantity of goods to the buyer then the following cases may take place:

• If the quantity of goods is less as per the contract then the buyer can reject the goods.
• If the quantity of goods is more than that of contract than the buyer can keep the number of goods as per the contract and reject the rest or he may also reject the total.
• If the goods ordered are mixed with the goods of different descriptions( i.e. goods with a different title or different quality), the buyer may reject the goods or accept the goods. 
• If there is no contract for the instalment delivery, the seller cannot force the buyer to accept the instalment delivery. 
• The buyer has the right to check and examine the goods. 
• If the buyer once accepted the goods then he cannot reject the goods. 
• If the buyer refuses to take the delivery then he would be responsible for it. 

According to Section 36(3) of the Sale of Goods Act 1930, if at the time of delivery the goods are in possession of a third party then there will be no delivery unless and until the third party tells the buyer that the goods are being held on his behalf. This section would not create any impact on the transfer of title of the goods.

Who is an Unpaid seller?

As defined by Section 45 of Sale of Goods Act, 1930, a person has sold some goods and has not got the whole price and if the transaction is done through negotiable instruments like cheque, bill of exchange and a promissory note, then the person can be said as an unpaid seller.

Illustration- If A is a seller and he delivers the goods to B and transfers the possession, and if B hasn’t paid the sum then A becomes an unpaid seller.

Rights of an unpaid seller

Section 46 of the Sale of Goods Act 1930, discusses the rights of an unpaid seller. This can be of two types:

• Against the goods – jus in rem ( right against property)
• Against the buyer – jus in personam (right against the person)

Right against the goods 

• Right to a lien which means the seller has the right on the possession over the goods.
• Right to stoppage in transit which means the seller can call up the carrier transporter and tell not to deliver the goods.
• Right to resale means the seller can again sell the goods as he has the possession of the goods.

And the rights like the right to lien, the right to stoppage in transit and the right to resale are also applicable for the agreement which is made for sale.

Rights against the buyer

• The seller has the right to sue the buyer for the price if the seller has already sold the goods and the buyer hasn’t paid the sum.
• The seller has the right to sue for the damages, for e.g. if the seller has sent the carrier for the delivery and the buyer isn’t available to receive the delivery and the goods returned back by the carrier to the seller then he can sue the buyer for damages like the packing of goods, transportation charges and so many.
• If the buyer hasn’t paid the price of the goods to the seller after the delivery within a stipulated time period as given in the contract, then the seller can sue for the interest on the buyer.

References

• http://legislative.gov.in/sites/default/files/A1930-3_0.pdf
• https://www.toppr.com/guides/business-laws/the-sale-goods-act-1930/rights-of-unpaid-seller-against-goods/
• https://www.scribd.com/doc/80635998/DUTIES-OF-SELLER-AND-BUYER
• Rights and Duties of Buyer and Seller under Sale of Goods Act,1930 – Free BCom Notes
• https://blog.ipleaders.in/unpaid-seller-rights/
• https://www.toppr.com/guides/business-laws/the-sale-of-goods-act-1930/performance-of-contract-of-sale/ 

The post Performance of the Contract of Sale under the Sale of Goods Act appeared first on iPleaders.

This article has been written by Rutuparna Sahu from KIIT School of Law, Odisha. This article is an analysis of the hire purchase agreement.

Introduction

Hire purchase agreements are the kind of agreements whereby the owner of goods allows a person (the hirer) to hire goods from him for a specific period of time by paying instalments. Here, the hirer has the option to buy the goods at the end of the contract if all the instalments are paid respectively. Most of us get into the dilemma of whether this is a contract of sale.

Hire purchase agreement is not a contract of sale but a contract of bailment as the hirer hardly has the option to buy the goods and it is a notable fact that although the hirer has the right of using the goods, he is not the legal owner while the term of the agreement is functioning. In India, all the hire purchase finance organisations are controlled by the Hire Purchase Act, 1972. However, a Bill was initiated in the year 1989 for making certain amendments which could never come into force.

Such a transaction has two basic elements which are governed by the Indian Contract Act, 1872 and Sale of Goods Act, 193:

1. Bailment- This aspect of the hire purchase agreement is governed by Chapter IX of the Indian Contract Act which covers finance agreements like the purchase of consumer durables such as motor vehicles, computers, household appliances like televisions, refrigerator. 
2. Sale- This aspect of the hire purchase agreement is a part of the Sale of Goods Act. The law commission had recommended in its eighth report of Sale of Goods Act that there should be a separate enactment regulating hire-purchase transaction. As there were no proper laws to regulate such transactions of hire purchase hence provisions were made by a separate act called the Hire Purchase Act 1972.  

Features of Hire Purchase Agreement

• One should be cautious while selecting the asset and enquire about the rightful owner of that assets because it may so happen that the goods are hired and later on, it is found that the vendor is not entitled to those goods.
• Keeping a check on the cumulative instalment amount is very necessary to make sure that it should not exceed the actual value of assets.
• It is also required that the hirer should possess the copy of the hire purchase agreement.
• Hire purchase agreement is such that it can be changed as per the convenience with the consent of both the parties i.e. the hirer and the hiree just like any other agreement.
• The hirer should make sure that the agreement mentions the hire charges and other terms of payment and their consequences in the manner he understands and interprets and the terms are favourable as far as possible and agreeable.
• There should be transparency and the agreements should have clarity of terms that are mutually agreeable by the parties.
• This mode is generally used for cars and high-value electrical goods where the buyers are not able to pay for the goods directly.
• Generally, If we compare buying something with a hire purchase agreement with buying something outright, the former would cost you more.
• In a hire purchase agreement ownership is transferred to the purchaser after the full payment of the particular article.

Working of a Hire Purchase Agreement 

A hire purchase agreement is somewhat similar to the concept of rent-to-own transactions which gives the purchaser a fair chance to buy the article whenever it is feasible to him while the agreement is in force. Likewise, hire purchase gives a benefit to the purchaser by providing them with fewer credits by diverting the cost of expensive articles which they otherwise could not have afforded over a time period. However, the purchaser is not eligible to be the owner of the article unless he has paid the full amount of the article, which means it is no way related to the extension of credit. 

And as in Hire Purchase, the ownership is not transferred initially as the articles that they hire are protected by the vendor because the full payment is not yet done. The vendor must have the assurance that the article would be kept in good condition until the full payment is received. So it is one of the secured ways of transaction.

Click Here

How Hire Purchase is different from Installment Sale?

• Unlike in the instalment sale, where the buyer becomes the owner of the property immediately as the contract is signed by both the parties but in case of a hire purchase agreement, the hire purchase is eligible to be the owner only after the payment of all the required instalments to the hire vendor.
• Installment is a contract of sale. Here the buyer has all rights to dispose of the property as he wants, but in a hire purchase agreement, the hire-purchaser and hire-vendor are related to each other as a bailee and a bailor which does not allow the hire-purchaser to dispose of a property in any manner.  
• As in case of instalments, the buyer becomes the owner immediately after signing the contract. So, any loss to the goods will be compensated by the buyer himself but in case of a hire purchase agreement, the hire-purchaser is not bound to compensate for the losses to the goods (if any) if was taken care of with due diligence as the hire-purchaser is not yet the absolute owner.
• In case of default in payment of instalments the seller is only entitled to sue the buyer for the unpaid amount of installment and has no right to repossess the property. But in case of default in payment of installment by the hire-purchaser in a hire purchase agreement, the hire-vendor has a right to repossess the property. 
• In case of an installment, a buyer cannot terminate the contract and is liable to pay all the instalments. But in case of a hire purchase agreement, the hire-purchaser can terminate the contract if he wishes to and can return the goods but is not entitled to pay the remaining instalments.

Parties to a Hire Purchase Agreement

In the hire purchase agreement, the contract is basically between two parties viz. the hire-purchaser and the hire-vendor and sometimes there is an involvement of a third party that is the financer. 

Duties of the Hire-vendor (owner)

• The hire-vendor has to deliver the goods in due time as required and should make sure that the goods delivered are in good condition.
• It is the duty of the owner to ensure that the goods are true to the description in accordance with the buyer’s preferences. Also, the goods should match the expected description. 
• The owner must have a title to the goods that are to be contracted for the hire purchase.
• The hire-vendor and the hire-purchase both the parties are required to render the basic information required such as the dates of the transaction and a reminder for the payment of the remaining amount.
• The goods for hiring must be of merchantable quality and should satisfy all the criteria required to fit into the purpose for which they were hired. Moreover, the property should be free from encumbrances. If at all there is any kind of defect in the property, it should be of a minor one which is noticeable. For example in the case of Anoka vs. SCOA Warri, the hirer returned the bike of the vendor because of some defect in the engine. The court in this matter held that the implied term of fitness for the purpose would not be applicable in this case because the defect is a major one which cannot be noticed easily.
• The hirer has the right to quiet the possession anytime he wishes to but besides that, it is the duty of the vendor not to interrupt the hirer in any way while possessing the good.

Duties of a hirer

• It is the hirer’s duty to be present while receiving or accepting the goods delivered by the owner and if in case he fails to do so he can be sued for non-acceptance of the goods.
• No doubt the hirer has a right to use the property as if it was his own but with a condition that he must take care of the property with due diligence. 
• If in case, the hire purchase agreement ceases to be valid, the hirer is obligated to redeliver the goods to the owner in exactly the same condition as it was received. 
• The hirer is bound to pay all the instalments required when it is due. In the case of Animashawun vs. CFAO, the hirer was in default of payment of the instalments and as a result, the owner repossessed the goods. The court’s decision was in favour of the owner and held that the owner has all the rights to repossess the goods on default of the remaining instalments. 
• Mere hiring a good does not give a hirer the right to dispose of the goods delivered by the owner and this stays uninterrupted unless the full payment is done. 
• It is the duty of the hirer to not act inconsistent to anything relating to the goods nor to the owner’s right over the good and this stays uninterrupted unless the full payment is done. 

Contents of hire-purchase agreements under Section 4 of the Hire-Purchase Act 

Every hire-purchase agreement needs to state the followings –

• The price of the goods to be hired as agreed by the parties. 
• The said cash price of the goods, at which the goods are to be purchased by the hirer for cash.
• The exact date on which the agreement shall be deemed to have taken place.
• The number of instalments required to pay the hire purchase price, the amount for each of the instalments, with the date upon which the instalments are to be paid, the person to whom the instalments are to be paid and the proper place where the transaction needs to be done.
• About the goods that are to be hired in such a manner that it can be identified by the hirer.

Major demerits of a Hire-Purchase Agreement

• If we go through the real-life scenario this method of the transaction would cost you more than the usual buying option.
• Hiring never comes with absolute ownership because the vendor can repossess the goods on the failure of payment of instalments.
• The duration of most of the hire purchase schemes is very long and stringent. 
• The hire purchase schemes are never free of cost. You have to pay a certain amount initially, which is usually very high, with the amount of instalments agreed.
• Even if you are insured for the particular good and the product incurs damages, you cannot claim for the insurance money unless you own the property. And the cost of damage automatically gets added to the remaining instalment money that is to be paid.

Latest scandals regarding the hire purchase agreement 

• Errors in credit and loan agreements are the latest scandals to disturb the banking sector. According to the latest disclosure by HSBC (Hong Kong and Shanghai banking corporation), a huge number of consumers are to be refunded for mistakes in paperwork relating to the agreements. 
• Besides that, some of the reports by many Britain banks and building societies say that annual statements, arrears notices and other correspondence held by consumers could not comply with the Consumer Credit Act because of lack of information provided to the consumer which they are entitled to have the knowledge.  

Conclusion 

According to the above research, we can conclude that the concept of hire purchase agreement is the best way to hire any article which is generally expensive to afford and at the end, you can even purchase it if you are able to. But as a matter of fact, it costs you more because the instalment money is generally added with interests and outstandings of the particular article. 

References 

• https://indiankanoon.org/doc/1574709/
• https://indiankanoon.org/doc/171398/
• https://indiankanoon.org/doc/651105/
• https://www.legalcrystal.com/acts/search/name:indian-contract-act-1872-chapter-9-of-bailment
• https://www.coursehero.com/file/p6e43ft/Another-implied-condition-is-the-fitness-for-the-purpose-for-which-the-goods/
• http://www.ijhssnet.com/journals/Vol_5_No_10_October_2015/27.pdf
• https://indiankanoon.org/doc/1574709/
• http://www.legislation.gov.uk/ukpga/1974/39/contents

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

The post An Analysis of the Hire Purchase Agreement appeared first on iPleaders.

This article has been written by Ishaan Banerjee, from Vivekananda Institute of Professional Studies, Delhi, affiliated to Guru Gobind Singh Indraprastha University. This article explores trademark law as a sought after option for lawyers and what are the top law firms practising trademark law in India. This list will be useful to know what exposure one can get and the level of skills one needs in the trademark law industry.

Introduction

Trademark law has emerged as a lucrative opportunity for practising law and it is still expanding. With the globalization and expansion of trade and business, India signed the TRIPS Agreement (The Agreement on Trade-Related Aspects for Intellectual Property Rights) for protection of trademarks and this has brought a large amount of business and litigation in trademarks being conducted in India. The government, in 2017, made some trademark rule changes which brought much-needed improvements like expedited prosecution and electronic service of documents. In this growing legal market, firms are succeeding and their specialisation in trademark matters is improving day by day. 

If you want to be a successful trademark lawyer, this compiled list of the top 10 trademark law firms in India, while not definitive, would certainly give you an idea of what law firms are the top in the business and identify their key practice areas, along with gauging the level of skills needed to work in these firms. 

This list has been divided into two parts: the first one is for firms leading in enforcement and litigation and the second is for firms leading in prosecution and strategy.

Enforcement and litigation

Anand & Anand

• Formed in 1923, Anand & Anand is a full-service intellectual property rights law firm, covering everything under the ambit of intellectual property. This includes trademarks, copyrights, litigation and other areas like geographical indications (a sign used on products that have a particular geographical origin and whose special features are due to that place of origin) and biodiversity etc. The firm’s key and most successful practice areas are in the fields of copyrights, designs, patents, trademarks and litigation.
• The firm has advised a range of top Fortune 500 corporations, medium and small enterprises and startups across different industries. The firm has been awarded ‘Firm of the Year’ in the Asia Awards 2019 under the Managing Intellectual Property category and has been ranked Tier 1 across the trademark prosecution and contentious rankings. The firm has had several victories to its name, including successfully obtaining a permanent injunction against a restaurant called Social Goregaon for the infringement of trademark and copyright. 
• The firm provides services in the trademark field, such as brand development through complex searches, protection, enforcement with regard to issues like counterfeiting, disparagement and commercialization through licensing, mortgage and other means.
• Here is the link to their website: https://www.anandandanand.com

K & S Partners

• Founded in 1994 as a three-member team, in this short period of time, K & S Partners has expanded to Gurgaon, Mumbai, Hyderabad, Chennai and Bangalore and now includes over 120 professionals with an overall strength of 260. The firm has dealt with clients from neighbouring countries such as Pakistan, Sri Lanka, Bhutan, Myanmar etc, along with national clients. 
• The firm offers services in the range of prosecution, advisory, protection and transactional services across the practice areas of copyrights, designs, geographical indications, litigation, patents, trademarks and plant varieties.
• The firm specialises in trademark prosecution and enforcement. While the trademark prosecution team has a lot of experience, the enforcement team is still relatively inexperienced. However, it boasts of an equally strong team dealing with both civil and criminal enforcement matters.
• Here is the link to their website: https://www.knspartners.com

Remfry & Sagar

• Remfry & Sagar practises in the areas of patents, trademarks, designs, copyrights, IP litigation, patent litigation, corporate law, technology, media, and telecom. 
• This firm holds to its account a huge 15% of all inbound trademark registrations in India. The firm’s clients include reputed businesses, startups and Fortune 500 companies, policymakers and government agencies. 
• The firm was ranked as a Tier 1 firm for IP for 4 successive years starting 2016 to 2019 under the Legal 500 Asia Pacific rankings and was the winner in the intellectual property rights category under the India Business Law Journal Awards 2019.
• Here is the link to their website: https://www.remfry.com

RK Dewan & Co

• RK Dewan and Co have rapidly grown to cross borders with its own team of foreign associates. It is already a well established firm in premier cities of India like Delhi, Mumbai, Kolkata, Pune and Chennai. 
• The firm has a wide range of clients ranging from small and medium enterprises, academic and research bodies, public and private companies to government bodies and MNCs. These clients come from varied fields like agriculture, nanotechnology, software, automobile industry and food packaging industry etc
• The firm practises in every aspect of IP and provides a multitude of services such as agreement drafting, IP litigation, valuation, audit and even IP training and education.
• In 2014, the firm successfully defended Taparia Tools Limited in front of the China Trademark Review and Adjudication Board against a trademark infringement suit instituted against it by a local Chinese brand, thus bringing great relief and serving as a victory to the client.
• Here is the link to their website: https://www.rkdewan.com/index.php

Saikrishna & Associates

• This is a tier 1 full-service firm with the practice areas being intellectual property, telecommunication, corporate law and competition law. Founded in 2001, the firm has expanded rapidly to include 19 partners & associate partners as well as over 100 plus lawyers.
• The firm has a humongous practice area along with engagement in industry sectors like FMCG and retail, automotive, media and entertainment, software and artificial intelligence etc.
• Sources have referred this firm for its enforcement and litigation services, which are under the charge of the experienced litigator Saikrishna Rajagopal. 
• Here is the link to their website: https://www.saikrishnaassociates.com/index.php

Click Here

Prosecution and strategy

Anand & Anand

• Anand & Anand once again tops the list for firms involved in trademark prosecution and strategy. Led by the outstanding litigator and Managing Director Pravin Anand, the firm has emerged as one of the top firms for not only trademark law but also for entire IP law. 

Archer & Angel

• This firm operates in the sectors of retail, franchising and distribution, real estate and construction, employment, corporate and anti-corruption and compliance, along with intellectual property matters. The team also advises on technology transfer, licensing, trade secrets and unfair competition. 
• The firm deals with clients of Fortune 100 and Fortune 500 repute and provides for the protection and defence of their trademarks. The firm has an established presence in SAARC countries.
• The firm particularly takes a front line action of cease notice/ legal notice to avoid the time involved in litigation. The firm also has been involved in collaborating with investigation teams and raids of places which have been accused of trademark infringement. The firm also has the specialised service of securing registration of brands with Indian Customs for border protection. 
• It has also successfully defended a South-East Asian company against a US corporation which filed a trademark infringement suit in connection to the distribution of products in the Indian markets.
• Here is the link to their website: http://www.archerangel.com/home/

AZB & Partners

• AZB & Partners practise encompasses a wide area including aviation, employment, microfinance, white-collar crimes, international trade and intellectual property etc.
• One of the top law firms in India, it is also a major player in intellectual property rights as well. It was Top Ranked in the Chambers Global 2019 and has been the recipient of various awards as well. The firm is renowned for its availability.
• The firm practises trademark due diligence, portfolio management, litigation, enforcement, prosecution etc.  
• Other specialised services include drafting, negotiation, conducting property and brand audits, customs records and border enforcement for brands.
• Here is the link to their website: https://www.azbpartners.com/

Chadha & Chadha Intellectual Property Law Firm

• Chadha & Chadha is a patent and trademark agency. It is involved in all areas of intellectual property including patents, trademarks, plant varieties, licensing, copyrights etc. The firm is known for its availability and keenness on building lasting relationships with its clients.
• The firm is also involved in practising in diverse technical fields like that of automotive, healthcare and pharmaceuticals, metallurgy, sports equipment etc
• It also has an international presence with organisations like the Institute of Trademark Attorneys (ITMA) and the International Trademark Association etc.
• Services include trademark searches, application filing, drafting, prosecution, registration, oppositions, assignment records etc.
• Here is the link to their website: https://www.candcip.com

De Penning & De Penning

• This firm is known for trademark prosecution; the case management system helps to cut costs and helps to work efficiently. Established in 1856, it is one of the oldest IP law firms in India. This firm is involved in all aspects of intellectual property.
• The firm provides its services not only in India but across the world. Trademark application filing, searches, opposition, prosecution and registration; a multitude of services are provided by the firm.  
• Here is the link to their website: http://www.depenning.com/intellectual_trade.htm

References

[1] https://www.worldtrademarkreview.com/directories/wtr1000/rankings/india

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

The post Top 10 Trademark Law Firms in India appeared first on iPleaders.

This article is written by Arijit Mishra, from KIIT School of Law, Odisha. This article talks about the analysis of comparative advertisement and its disparagement. It also talks about how an advertisement is called disparaged.

Introduction

Advertisements of products are one of the best methods to reach the audience and provide information about a product. However, for the monetary benefit, the market players use lawful techniques which may damage the competitors image by disparagement. This form of disparagement (a misleading or untrue statement about a competitor’s goods) is comparative advertising.

In India, the Advertising Standards Council of India (ASCI) is a self-regulated voluntary organization which deals with the dispute relating to advertisements. The AISC aims at achieving fair advertising practices by controlling the content of the advertisement. Comparative Advertisement is a relevant field of IPR which is gaining importance due to the competition between various traders existing in the market economy.

When does Comparative Advertisement turn into Disparagement?

One technique that companies use during advertising their products and services is drawing comparison against their competitor’s product or services. This advertising technique is known as comparative advertising.

The common example of comparative advertising where many of us are familiar with the cellular telephone companies, where a wireless service coverage map of the United States is shown and side by side compare the leading competitor’s wireless service coverage map of the US.

The advertisements have a major impact because they show the visual comparison between the advertising company’s coverage map and the leading competitors. The purpose of these types of advertisements is to illustrate the customers about the low status of the competitors product or services and make them think that their product is better.

Comparative advertising is effective, but sometimes it can create false advertising where legal issues are created on the adviser who uses this technique. Misuse of Comparative Advertising can result in disparagement. 

A new dimension was provided for the extent of comparisons allowed under a comparative advertisement which is reflected in this case- 

Havells India Limited Vs. Amritanshu Khaitan & Others

In this case, the plaintiff was asking to restrain defendant for misleading and disparaging advertisements, where the defendant compared their product i.e “Eveready LED Bulb” with the product of plaintiff’s “Havells LED Bulb”

The Court held that comparative advertising is permitted when these following conditions are fulfilled-

• Goods and services meeting the same needs or for the same purpose.
• One or more material which is relevant(which can include price).
• Applicability of the product is the same.

The court stated that care must be taken in the statements while comparing with the competitors product which should not be defamatory, libelous, confusing or misleading. The Court again stated that a certain amount of disparagement is not directly expressed in the comparative advertisement. In looking at the above statements the court held that it is open to the adviser to highlight the special feature of a product which sets it apart from its competitor and make a comparison which is true. 

The Court also stated that mere trade puffery is uncomfortable to the registered proprietor than it did not bring the advertisement within the trademark infringement.

Comparative Advertisement as the Constitution of India

Article 19(1)(a) of the Constitution of India talks about Right to Freedom of Speech and Expression in which advertisements can be also argued. It is important to analyse Article 19(1)(a) of the Indian Constitution with relation to the comparative advertisement. The freedom under this article is available for public speaking, radio, television and press but, the State has put certain limits to it under Article 19(2) of the Constitution of India.

Hamdard Dawakhana (Wakf) Lal vs. UOI 

In this case, the validity of delegation (a body of representative) was challenged. The Drugs and Magic Remedies Act, 1954 was passed to prevent self-medication and unethical advertisements. Section 3 of this Act specify certain conditions in which an advertisement can be banned.

The Supreme Court held that the advertisements of the prohibited drugs are not speech and expression under Article 19(1)(a) of the Indian Constitution. The Court said that advertisements for non-prohibited drugs come under free speech. But, the advertisements of such drugs which are prohibited by certain statutes or codes in India then it will not be protected. This is the reason that Article 19(2) provides reasonable restrictions on the freedom of speech and expression which is guaranteed under Article 19(1) of the Indian Constitution.

Comparative Advertising and Trademark Infringement

The main objective of a trademark is to distinguish goods and services, which will help the consumer to identify the goods.

If in case, the advertiser uses the trademark of the competitor to mark a comparison between the goods than it amounts to disparagement. 

The act of the advertiser not only relates to the issues of Comparative Advertisement and product disparagement but also it is related to trademark infringement.

Legal Provisions in India relating to Comparative Advertisement

• The Monopolies and Restrictive Trade Practices Act, 1969 provides the indication on which comparative advertising works. Under this Act, any representation which gives false information or disparages the goods and services of other products, it will be considered as comparative advertising.
• The Trademarks Act, 1999 states that comparative advertising is permissible but with certain limitations i.e unfair trade practices and also states that a registered trademark is infringed by a person if he uses such registered trademark as his trade name or part of his trade name etc,.
• Section 29(8) of Trademarks Act, a registered trademark is infringed by any advertisement of that trademark, if such advertisement makes any unfair advantage, or is against the reputation of the trademark and if don’t have honest practice.
• Section 30(1) of Trademarks Act 1999, states that if someone violated Section 29 then he can be escaped by showing that it was an ‘honest practice’. When there are comparative advertisements then it might reduce the value of the trademark of the competitors. 

Problems or Shortcomings of Comparative Advertisement and Disparagement in India 

There should be some new laws to strengthen its application in India from the disputes arising out of comparative advertising. Judicial Decisions have an important role in determining the disputes arising from comparative advertisement, but they are very adequate precedence. Certain changes are required to boost the laws relating to comparative advertisement. There are certain abuses used in disparagement like false claims, false representation, unfair trade practices etc.

There must be certain laws to prevent these abuses. The injunction is the only remedy given by the Court in the methods related to disparagement.  

Relationship between Comparative Advertising and Disparagement

Comparative Advertisement can be supported on the basis that advertising is a commercial speech which can be protected under Article 19(1)(a) of the Indian Constitution. However, freedom of speech and expression do not allow defamation.

So, it would be wrong to say that, advertiser has the liberty to disparage the product of his competitors, under the freedom of speech and expression.

Product disparagement is not only limited to the comparative advertisement but, the act of the third party can also constitute product disparagement.

Case Studies

Reckitt and Colman of India Limited vs. Kiwi T.T.K Limited

In this case, Colman is the plaintiff and Kiwi is the defendant, the advertisement was between two liquid polish companies. The defendant while advertising state ‘KIWI’ on one side and ‘OTHERS’ on the other side with their respective liquid wax showed that the wax which was used to write ‘OTHERS’ fell from the surface,  but the wax which was used to write ‘KIWI’ was stuck properly.

The bottle named brand X which was used to write ‘OTHERS’ was on a shape as that of a registered designed bottle of Cherry Blossom. This advertisement was used both in electronic media and by different posters which were hung in the public market.

So, the plea of an injunction was filed by the plaintiff to prevent the defendant’s company from giving such advertisement.

Court held that the defendant was disparaging the goods and told to restrain from advertising in a disparaging manner. The High Court added to this judgement and held that the advertiser can make a statement that his goods are one of the superior quality but should not disparage or defame the competitors product.

Dabur India Limited Vs. Colgate Palmolive India Limited

In this case, a film actor was rubbing the plaintiff’s dental powder on the surface of the purchaser’s spectacles which left marks on spectacles depicting that it was sandpaper. This advertisement shows how the defendant’s product was sixteen times less effective than the plaintiff’s product and was also less damaging to the teeth. 

Relating to the precedents in the Pre-Trade Marks Act era, the Court held that this is a case of disparagement which cannot be allowed to do such an act under any circumstances and hence the plaintiff is entitled to an injunction and accordingly the defendant is restrained from telecasting such advertisement

Colgate Palmolive India Limited v. Hindustan Unilever Limited

In this case, the advertisement of the new Pepsodent disclosed that their product is better than the other leading toothpaste available in the market. In an add sample of saliva was taken from two boys, where one person brushed with the Pepsodent toothpaste and another brushed with a leading toothpaste.

This experiment shows that the maximum amount of germs in the saliva are present after brushing leading toothpaste. When the boys were asked which toothpaste they brush in the morning, from those two boys, one boy answered Pepsodent toothpaste. But during the time of the other boy’s response, it was muted. But looking at his lip movement, it was seen that the boy was referring to Colgate. As Colgate is used by a maximum number of people, it will be considered as the leading toothpaste brand.

The Court gave a temporary order to restrain the respondent from referring to any Colgate toothpaste in any manner, either directly or indirectly by means of any hint in any television ads, etc by comparison of its New Pepsodent with any of the Colgate products or Colgate Dental Cream in particular.

UK Jurisdiction on Comparative Advertisement

In the UK, comparative advertising is very liberal. The UK government thinks Comparative Advertising as a legitimate, useful, effective marketing tool and also helps in increasing the competition among the companies and educate consumers about such market practices.

Section 11(2) of the UK Trade Marks Act, 1994 permits only for the fair comparison of goods to be done between the advertiser and the competitor. The comparison must be an honest one. If these conditions are met then it will be admissible in this provision, if it isn’t met then won’t be admissible under any provision

Barclays Bank v. RBS Advanta 

In this case, RBS Advanta distributed a brochure which contained a comparative table of the fees and interest rates of different credit card companies which include Barclaycard Visa, which is a registered mark of the Barclays Bank. So, Barclays Bank considered this act of the defendant that it has infringed his mark.

The Court held that the objective of the defendants act was honest to inform the consumers. The defendant also stated that comparative charts gave them a better deal with the consumers. Hence comparative advertisement was allowed by the Court.

British Airways plc v. Ryanair Limited

In this case, Ryanair prepared comparative advertising by means of the banner where at the top of the banner, a comparison of the pricing was made which shows that British Airways airfare is five times costlier than Ryanair air fair but in reality, it was three times costlier than the Ryanair airfare. So, British Airways alleged that Ryanair infringed the trademark of British Airways.

Even though the Ryanair has made the wrong statement of comparison, the Court felt that it did not infringe the plaintiff’s trademark. But, the Advertising Standards Authority(ASA) stated that the statement by Ryanair makes false offences against British Airways.

Conclusion

From the above article, we have learned that when an advertiser takes unfair advantage or gives any statement which is misleading or untrue than it is a disparagement. An act done by a third party can also cause disparagement. Some laws should be made to stop disparagement. An injunction is the only remedy given by the Court for the offences related to disparagement. 

References

• https://www.lexology.com/library/detail.aspx?g=c200e9b5-d6a9-4584-9e9d-01ede06d2f56
• https://www.lakshmisri.com/insights/articles/comparative-advertising-acceptable-competitive-behaviour-and-law-of-disparagement#
• http://www.legalservicesindia.com/law/article/1136/7/ANALYSIS-ON-COMPARATIVE-ADVERTISEMENT-RESULTING-IN-TRADEMARK-INFRINGEMENT
• https://www.rplegalindia.com/comparative-advertising-and-product-disparaging/
• http://www.lawstreetindia.com/experts/column?sid=275

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

The post Analysis of Comparative Advertisement and Disparagement appeared first on iPleaders.

This article is written by Aryan Kashyap, from Lloyd Law College, Greater Noida. This is an exhaustive article on International Space Laws, covering the legislation and jurisdiction of such laws. At the same time examining the crimes in space and its constituents.

Introduction

We can describe space laws as the statutory body of law having jurisdiction over all space-related activities. All the States fall under the purview of Space Laws. In this regard, they are very similar to International Laws. It is comprised of these:

• International Agreements.
• Treaties.
• International Conventions.
• United Nations General Assembly Resolutions.
• Other Rules and Regulations of International bodies.

Who legislates Space Laws?

The term “Space Laws” primarily refers to all the rules, regulations, principles and standards of procedures. The principle International Organisation which works on outer space-related affairs is the United Nations Office for Outer Space Affairs (UNOOSA). The main functions of the UNOOSA are:

• Ensuring the peaceful use of space.
• Regulating the exploration of space.
• Ensuring the usage of space science and technologies for sustainable economic development.
• The utilisation of space for social development.

United Nations Office for Outer Space Affairs (UNOOSA)

Initially, the UNOOSA was formed as a small expert unit under the United Nations Secretariat as an ad hoc committee, promoting the peaceful uses of outer space. It was established in 1958, in the General Assembly resolution 1348 (XII).

Soon after its formation, the UNOOSA unit was moved to the Department of Political and Security Council Affairs and later it was metamorphosed into the Outer Space Affairs division of the Department in 1968.

UNISPACE Conferences

Sputnik 1 marked the advent of the space age back in 1957. Since then the United Nations has been stressing on the importance of peaceful international coordination in outer space. The outer space is believed to be the wild west, but many don’t know it has the potential to support immense socio-economic development for the future. 

No single country had the technology advanced enough to go out there and reap those benefits. Thus, as the famous saying goes, “Unity is strength”, the need for global cooperation on this was recognised.

Overseeing this immensely beneficial scope of development, the UN organised a series of global conferences for the exploration and peaceful uses of outer space and its resources. These series of conferences were known as UNISPACE conferences. There have been three UNISPACE conferences, all of them were held in Vienna.

The key agendas discussed in each of the conferences:

UNISPACE I

The data and information as per the information provided by the Official UNISPACE I Report:

Timeline: held from 14th August to 27th August 1968.

Attendees: 78 member states, 9 specialized UN agencies, 4 other International organisations.

Key takeaways:  This was the first of the series of the conferences: 

1. Raising awareness of the vast potential of space. 
2. Discover possible space benefits for the entirety of humankind. 
3. Review the advancement of space science and technology. 
4. Promote international cooperation. 
5. Work for development, keeping in mind the benefit of the third world countries. 
6. Recommended the formation of an Expert Space Applications Unit. (This later turned out to be UNOOSA)

UNISPACE II

The data and information as per the information provided by the Official UNISPACE II Report: 

Timeline: held from 9th August to 21st August 1982.

Attendees: 94 member states, 45 Intergovernmental and Non-governmental organisations. 

Key takeaways: this was the second of the series of conferences. This question raised many important contemporary questions: 

1. Asked about the procedure of maintaining the usage of outer space for peaceful purposes.
2. Questions about preventing an arms race in outer space.
3. What shall be the essential requirements of maintaining a peaceful exploration of outer space?
4. Enable means for the developing countries to benefit from the peaceful and healthy uses of technology.
5. UNISPACE II strengthened the UNOOSA programme.
6. Marked the establishment of UN-affiliated regional space science centres for the development of science and technology.  

UNISPACE III

The data and information as per the information provided by the Official UNISPACE III Report: 

Timeline: held from 19th July to 30th July 1999. 

Attendees: 97 member states, 9 UN specialised agencies, 15 International Intergovernmental Organisations. 

Key takeaways: this was the third of the series of conferences. This conference laid the foundation of peaceful uses of outer space in the 21st century: 

1. The need to protect the environment on a global level. 
2. Efficient management of natural resources. 
3. Protecting the space environment.
4. Increase the outflow of space science and benefits to the developing nations.
5. This conference ended with the Vienna Declaration on Space and Human Development infamous as The Vienna Declaration.
6. The Vienna Declaration recommended 33 strategies addressing contemporary challenges in space activities.

Jurisdiction of Space Laws

The Outer Space Treaty of 1967

The Outer Space Treaty is also known as the Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, including the Moon and other Celestial Bodies. At the time it was signed up by three countries:

• The Russain Federation.
• The United Kingdom.
• The United States of America.

This treaty further brought the reassurance that outer space was to be used only for peaceful purposes and it shall be for the betterment of mankind. It further laid out the direction to proceed:

• It brought into action the points as promised in the treaty. (International cooperation in matters relating to outer space, peaceful co-existence).
• Requested the countries signing up for the treaty to ratify the treaty as soon as possible.
• The treaty expressed its hope for its successful adherence for a long time.

Requested the committee to adhere by certain measures for peaceful uses of outer space:

• To come to an agreement to set the liability for the damages caused in the due process of launching objects into outer space.
• To come to an agreement on the aid of astronauts and space vehicles (returns and assistance).
• To form a lucid definition of outer space and the processes of its utilisation.
• To decide the various implications of communication in space.
• Provide a report of progress in work at the 22nd General Assembly Session.

By the virtue of this treaty, the states came to an agreement on these points:

Article I

• The exploration of outer space, which includes the moon and all other celestial bodies, shall only be carried out for the benefit of humanity, in the interest of all countries, without any discrimination on any grounds.
• The definition of outer space, which includes the moon and other celestial bodies, shall be free for exploration and is also open for use for all the states. This shall adhere to the norms of equality and other International Laws.
• The states shall have the liberty of conducting scientific investigations in outer space (which includes the moon and other celestial bodies). All the states must promote International cooperation in the matters concerning such investigations.

Article II

No action taken by any State can permit them to make claims of sovereignty over outer space, including the moon and other celestial bodies.

Article III

The states undertaking outer space exploration activities must act in accordance with the international laws as well as the UN charter. They shall also maintain international peace and cooperation in doing so.

Article IV

• The States entering the treaty must not place objects carrying nuclear weapons or any kinds of WMDs (Weapons of Mass Destruction) in the Earth’s orbit, stations and celestial bodies.
• The state parties entering the treaty are eligible to use the moon and other celestial bodies but for peaceful purpose only.
• The states are forbidden from setting up military bases, frontiers, fortifications, or even test weapons of any kind and the conduct of military drills or manoeuvres on celestial bodies and the moon.
• The military personnel shall be allowed to conduct scientific research, but for peaceful purposes only.
• The use of any equipment and necessary facilities is also permitted on the condition that they are for peaceful purposes.

Article V

• The parties who have entered into this treaty shall consider astronauts as representatives of mankind into outer space.
• The states must provide any possible assistance in the advent of any accidents, distress, or emergency situations upon landing in the territory of another state or on the high seas.
• When the envoys make such a landing (in a foreign territory), they shall be without any harm or distress returned to the state of which their vehicle is registered to. 
• When conducting space activities (both outer space and celestial bodies), the astronauts of one member nation shall provide all the possible assistance to a fellow astronaut of another state.
• It is the fundamental duty of a member state to immediately pass on the information to other states or to the UN Secretary-General. Information related to any phenomena occurring in outer space, including on the moon and other celestial bodies., especially when these constitute a potential danger to the life and health of astronauts. 

Article VI

• Any member State of the treaty, which launches or acquires an object into outer space, including the moon and other celestial bodies as well as the member state from whose land the launch was facilitated shall be held internationally liable for any damage to another member state of the treaty.
• The member states in case of any damages shall be held liable if their acts caused damages to any natural or juridical persons, even by its component parts, in air, in the outer space, on the moon and other celestial bodies.
• The activities of any non-governmental entity in outer space shall require a permit and constant supervision on the state’s end. This is for the concerned state from whose territory’s individual the operations are being carried out.
• The member states must ensure the compliance of the international laws by their parties.

Article VII

• Each state party of the treaty procures the right of launching objects into outer space, including the moon and other celestial objects.
• They shall be internationally held liable if their object harms any other state, property or person.

Article VIII

• A member state of the treaty has the jurisdiction over any object any personnel it has launched in outer space or on a celestial body.
• There is no change in the ownership of any object launched into outer space, even though it might have landed or constructed on a celestial body before returning to Earth. 
• Any registered objects found off limits of the member state shall be furnished back to the respective owner-state upon a request post identifying the identity.

Article IX

• In the due process of exploration of outer space, the moon and other celestial bodies, the member states of the treaty shall act the principle of mutual cooperation and act keeping in mind the interests of fellow states.
• The states, in the due process of exploration, must not contaminate or cause harm to Earth’s environment or even alien land.
• If a state discovers that its activities might potentially cause harm to other nationals or affects extra-terrestrial lands then they must undertake due diligence and priorly take necessary international consultations before proceeding.
• Any other concerned member states, if it oversees any such potential harm to the earth’s or the extra-terrestrial lands, then it may request an international consultation regarding the same

Article X

• In order to promote international peace and cooperation in the exploration of outer space, the member states, if possible must grant the requests of member states for an opportunity to afford a flight of the space objects.
• Such an opportunity can be afforded by means of an agreement between the member states.

Article XI

• In order to promote international peace and cooperation in the exploration of outer space, the member states must inform the Secretary-General of the UN plus the international scientific community the most feasible and practical locations for the conduct of activities.
• It is the duty of the UN Secretary-General to immediately pass on the information to other states for the benefit of all.

Article XII

• Other member states in the due process of exploration of outer space including the moon and other celestial objects shall be allowed to use all the types of equipment, installations, stations, vehicles and other requires instruments upon a reasonably sound and scheduled activity.
• The member states upon using this privilege must ensure that they are not disrupting any routine activity in doing so.

Article XIII

• All the provisions apply to the member states as well as upon any joint state space exploration to be undertaken.
• In case of any pragmatic question or any issues being raised, they shall be resolved amongst the member states with a respective international organisation or organisations.

Article XIV

• This treaty is open to all the states. Any state which did not wish to sign up for the treaty before, may in accordance with paragraph 3 of this article is open to signing up for it anytime.
• The instruments of ratification lie with the governments of the United Kingdom and North Ireland, The Union of Soviet Socialist Republics and the United States of America. These nation’s governments are the depositary governments of ratification of treaties i.e they approve the application of other states who want to enter into the treaty.
• This treaty shall be brought into force upon the ratification of five governments including the depository governments.
• The states whose instruments of ratification are put on hold shall be allowed to enter the treaty only when they are provided with the clearance by the depository state government.
• It is the duty of the depository government to bring to the notice of all the member states and the states aspiring to be a member of the treaty, the date of deposit of each instrument.
• This treaty falls under the jurisdiction of Article 102 of the Charter of the United Nations.

Article XV

• Any member state of the treaty is open to proposing amendments to this treaty.
• The amendments shall come into force only when it is accepted by the majority of the member state of the treaty.

Article XVI

• The member states are allowed to withdraw themselves from the treaty only after completion of a year.
• Such withdrawals come into effect only after a year from the date of publishing of the notification.

Article XVII

• Equally authentic archives of the treaty shall be presented in these languages:
  • English
  • Russian
  • French
  • Spanish
  • Chinese 
• Duly certified copies of this treaty shall be provided to the depository governments.

Treaties and Conventions governing Space Laws

As Andrew G. Hailey rightly said, legislating space laws might be one of the toughest feats for the law. The cosmos is vast. It is difficult to adjudicate it. Principally there are five international treaties which deal with certain rudimentary issues related to space. These issues are:

• Any state not appropriating space laws.
• The freedom of exploration and related issues.
• Damages and liability caused by space objects.
• Safety and rescue of astronauts and spacecraft.
• Avoiding harmful interventions.
• Avoiding environmental interventions.
• Conducting scientific investigation procedures.
• Method of the settlement of disputes.

Primarily, there are five treaties dealing under the UN’s umbrella governing outer space. These are also known as “five United Nations treaties on outer space”. They are:

Outer Space Treaty

As described earlier, it is one of the main laws which govern all the member states, who have entered into the treaty. This also promotes the peaceful use and exploration of space-related activities. It was signed back in 1967 and continues to date.

Rescue Agreement

The rescue agreement was given the green light by the General Assembly in 1967. This agreement supporters every means possible to help and rescue the astronauts in situations of distress.

The member states, upon request from the party in distress, must promptly assist the states to return registered space objects of the launching party. These two articles describe this treaty best. They are:

Article 5

• Any contracting State, upon receiving the information regarding the discovery of a space object or its components, whether in high seas or under its jurisdiction must inform the launching state and the Secretary-General of the United Nations regarding the same.
• All the member states of the treaty, upon finding an outer space object or any component under its jurisdiction, on the request from the launching party shall try to recover such an object if it is pragmatically possible.
• All the member states of the treaty, upon finding an outer space object or any component under its jurisdiction, on the request from the launching party shall try to return the object after its proper identification.
• As per paragraphs 1 and 2 of this article, if in the due course of the procuring the object, if the party discovers that it is hazardous in nature, the launching state must immediately take appropriate measures to eliminate or control the harm from the object.
• The costs incurred by the helping party in the course of procuring an object or its component from the space must be borne by the launching party.

Article 8

• All the states are open to suggest amendments in this agreement.
• The amendments must be passed on the basis of the majority opinion.

The Liability Convention

The liability convention was reached to an agreement in the UN General Assembly in 1971. This treaty basically elaborates on the outer space treaty’s Article 7. This convention provides the criteria on which a state becomes liable to pay damages to another state. This convention also has laid down the procedures of settlements of disputes and of the claim for the damages caused.

Article VII

• Each state party of the treaty procures the right of launching objects into outer space, including the moon and other celestial objects.
• They shall be internationally held liable if their object harms any other state, property or person.

The Registration Convention

The Registration Convention was negotiated and agreed upon by the General Assembly in 1974. After the ratification of The Outer Space Treaty, The Rescue Agreement and the Liability Convention, the states expressed their concerns that in order for these treaties and agreements to work effectively, there was the need of some formal recognition/identity. The need for this was that:

• In the absence of a proper registration system, it could not be decided whom to hold liable for any damage caused.
• The owner of the objects returned from the space could not be determined.

The Moon Agreement

The Moon Agreement has been the controversial one, amongst other conventions. This agreement was highly debated between 1972 and 1979. However, much later in 1984, it came into force with the ratification of the fifth country, Austria. This happened after the passing of the resolution 34/68.

The main points of this agreement are:

• The primary task was to confirm the other provisions of the outer space treaty apply to the moon and other celestial bodies.
• The moon and other celestial bodies must be only used for peaceful purposes.
• In the due process of exploration of the moon and other celestial bodies, no harm must be caused to the environment.
• The United Nations must be informed of the location and aims and objectives of any station that is to be established on the moon and on other celestial bodies.
• This agreement recognises the moon to be a common heritage of mankind. 
• No international body shall be allowed to make any claims of sovereignty on the moon and other celestial bodies.
• No international body or state is allowed to use these bodies for the purpose of exploitation.

Thus, these five treaties and conventions primarily govern and constitute the majority of space laws.

The International Space Station (ISS)

The International Space Station is an international programme. It is a huge spacecraft, weighing a whopping 450 tons. It is a collaborated programme between the following nations:

• European member nations.
• Russia.
• Canada.
• Japan.
• The United States.

The astronauts in The ISS mainly conduct scientific experiments which cannot be conducted on Earth.

The legal framework of the International Space Station

The ISS falls under the jurisdiction of various legal frameworks and obligations. It is governed on these International Agreements and Memorandum of Understandings (MoUs):

The International Space Station Intergovernmental Agreement

• The International Space Station Intergovernmental Agreement commonly referred to as ‘IGA’.
• This is an international Treaty which was signed on 29th January 1998.
• 15 state’s governments participated in the Space Station project.
• This agreement laid the foundation for a long term partnership for constructing a prototype of a civil space station in space, which would be used for peaceful purposes only.

The Memoranda of Understandings (MoUs)

Four Memoranda of Understandings were signed between these nation’s space organisations: 

• The National Aeronautics and Space Administration (NASA).
• Europe Space Agency (ESA).
• Canadian Space Agency (CSA).
• Russain Federal Space Agency (Roscosmos).
• Japan Aerospace Exploration Agency (JAXA).

The main purpose of these space agencies is to designate the roles and responsibilities of the agencies in the building and designing of the space station. These MoUs also demarcate the management structure and provide the necessary guidelines for the maximum utilisation of the space station.

Other Bilateral Arrangements

Several bodies have been created amongst the various space agencies to distribute the work and to help implement the other guidelines as decided by the IGA.

The Intergovernmental Agreement 

This agreement was signed by 14 countries. They are:

1. The United States of America
2. Canada
3. Japan
4. The Russian Federation
5. Belgium
6. Denmark
7. France
8. Germany
9. Italy
10. The Netherlands
11. Norway
12. Spain
13. Sweden
14. Switzerland

This agreement laid down the framework promoting cooperative long-term partnership between the signed countries and the other countries to join in future.

Who is the owner of the International Space Station?

No individual country is the owner of the ISS. It was built as a result of the collaborative efforts of five countries:

• The United States
• Canada
• Russia
• Japan
• European member nations

The collaborated ownership of the International Space Station is described under an International treaty, which is titled International Space Station Intergovernmental Agreement (The IGA). Article 6 of the IGA talks about ownership.

1. The IGA extends the national jurisdiction of the member states into outer space, which means that the equipment and elements (E.g. Laboratories can be classified as elements) they provide are subjects of the respective partner states.
2. Thes laws imply that space station’ owners – the United States, Canada, The Russain Federation, Japan and Europe, the various countries within the European Space Agency are to be treated as a single unit.
3. The elements of a state are its property. By the virtue of this, if a country has any property, equipment or a laboratory, it shall fall under its jurisdiction.
4. The application of national laws implies that in criminal cases, liability issues, cases of intellectual property and other rights the national laws of a nation must apply.
5. In case a dispute or disputes arise on any matter, they are to be resolved on the basis of the already laid down procedures. 
6. The fundamental norms imply that the member states retain jurisdiction and gain complete control over:

• Its state’s registered elements and equipment.
• Over the personnel of its state.
• These norms apply to anything in or on the space station who is a national of the member state.  

MoU on Supply of elements

All the member states contribute and bring their own elements. The memorandum of Understanding laid down the elements provided by the partners:

The Canadian Government with its representational agency the Canadian Space Agency shall provide: 

• The Space Station’s infrastructure elements.
• A mobile servicing centre (MSC).
• An extra flight element.
• The Special Purpose Dexterous Manipulator.
• Space Station’s Unique ground Elements.

The European partner, through their space agency, the European Space Agency, shall provide these:

• The European Pressurized laboratory.
• The basic functional outfits.
• Flight elements to supply and boost the Space Station.
• Other Flight elements.
• Unique Space Station ground equipment.

The Japanese Government through its space agency must provide:

• The Japanese Experiment Module.
• The basic functional outfits. 
• The exposed facility.
• Experiment Logistics modules.
• Elements supplying Space Station.
• Basic flight equipment.
•  Space Station’s Unique ground equipment.

The Russain Government, through its Space Agency, The Russain Space Agency, shall provide:

• Servicing and other modules.
• Research modules.
• Basic functional outfits.
• Payload accommodation equipment.
• Space Station’s Unique ground equipment.

The United State’s Government, through its space agency NASA must provide:

• A Habitation Module.
• Laboratory modules.
• Basic functioning outfits.
• Attached payload accommodation.
• Supply elements.
• Space Station’s Unique ground equipment. 

Laws and liabilities in the International Space Station:

When such a big project is being undertaken many problems could arise. Such an event was foreseen and measures were planned for such dire actions. Fundamental rules of liability regarding space activities as it is laid down in the Liability convention 1972. The liabilities set under this convention and the Intergovernmental Agreement are:

1. The Intergovernmental Agreement has set up a provision of ‘cross-waiver of liability’. This allows all the five-member states in addition to their related entities (the contractor, the subcontractor, users, customers) to claim damages from another state member or its related entities.
2. Due to following these obligations, each state has to formally set up a contract with its own contractors and subcontractors.
3. There exist some exceptions to the cross-waiver of liability. They are:

•  Intentional misconduct. 
• Claims made by a person for bodily injuries.
• Claims made by a person for death.
• Intellectual Property Claims.

All the people using the Space Station agree to an inter-party waiver of liability. It is a component of their contract with the European Space Agency. It states that:

• No state shall sue or bring arbitrary claims to any other party for INternational Space Station related activities.
• The laws applicable to raised disputes and other procedures have to be mutually decided by the member states of the Space Station and the member so the European Space Agency. 
• The contract between the member states must pre-decide the country where the Arbitral-tribunal shall meet.

Crimes in Space

Space is considered to be ‘res communis’, meaning common ground. There are some areas which are regarded as common ground by all the states. No particular state is the sole owner of these areas. These areas include the high seas, outer space, Antarctica etc. 

The Intergovernmental Agreement of the Space Station’s member nations states that if any astronaut of a member state commits any crime in space, he/she will be subject to the laws of their states and the due course of law will proceed accordingly. 

Is Space Mining Legal?

The scientists believe that the moon and other celestial bodies can have many sustainable resources which might pave a way for providing resources for future generations. The scientists even claim that if we are able to find water on the moon, we might be able to cut down the costs of colonizing the moon by a whopping 90 per cent. It might also have other valuable minerals like platinum and whatnot, this can give humanity the further push required.  

There are some companies looking forward to conducting mining on the moon and other celestial bodies.

As we know that the outer space is free for exploration by all the states, only if it is for peaceful uses. The regulations regarding private entities are vague.

The Asteroids Act of 2015

• This Act states that the resources that will be extracted from the asteroids and other celestial bodies shall be the sole property of the individual or corporation who extracted them.
• This act requires the space mining companies to avoid causing any harm to the outer space.
• This act gives permission to all the companies to sue other countries in the scenario, where they are causing harmful interference to space.

Can you push a dead body into space?

• The Outer Space Treaty of 1967 in its Article IX called for the appointment of planetary officers. The main duty of a planetary officer is to make sure that we do not contaminate other planets or celestial bodies in the process of conducting space exploration. 
• In unfortunate circumstances where an astronaut died of some accident or any health issues, the fellow astronauts are not allowed to put the body of a dead astronaut into space, because it invokes the possibility of that body carrying microbes to some other extra-terrestrial planet.
• Every time any state undertakes any space exploration, it is contaminating the outer space a little, because the spacecraft carrying the astronauts will be carrying some microbes from the earth which can settle in some extra-terrestrial land. This might trick us into believing we have discovered some new alien species.

The First Space Crime ever Committed

• In August, NASA astronaut Anne McClain was accused by her ex-wife for charges of identity theft. It was alleged that the crime was committed from the International Space Station using a NASA computer.
• This incident made Anne McClain, the first individual to be ever investigated for an alleged space crime.
• Contemporarily, there is no solid framework established under the international laws for handling such disputes.
• The only jurisdiction covering any dispute as of now arises under the IGA, that is any astronaut in alleged for any crime, shall be tried on the basis of their national laws.

Conclusion

In this article, I have talked about International Space laws and its origin. I have answered certain questions about who makes these laws, and how they are implemented. We explored the legislation and laws applicable to the International Space Station. Finally, we have talked about the crimes in space and what are the activities that constitute to be a crime in space and what are measures undertaken to control it.

References

• https://www.unoosa.org/pdf/reports/unispace/viennadeclE.pdf
• http://history.nasa.gov/printFriendly/1967treaty.html 

LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join: https://t.me/joinchat/J_0YrBa4IBSHdpuTfQO_sA

The post International Space Laws and Crimes in Space appeared first on iPleaders.