In commercial transactions, sellers often extend credit to buyers. However, when payment defaults occur, the seller faces financial risk. To protect their interest, the law recognizes a category called unpaid seller and grants specific rights to such sellers. Understanding these rights is vital for businesses, financial institutions, and legal professionals, particularly in the banking and…
RBI in its Statement on Developmental and Regulatory Policies on Thursday (August 8, 2024) announced the implementation of Continuous Clearing of Cheques under the Cheque Truncation System (CTS). The Cheque Truncation System (CTS) currently processes cheques with a clearing cycle of up to two working days. To improve the efficiency of cheque clearing and reduce…
A contract of sale is an agreement whereby a seller transfers or agrees to transfer the ownership (property) in goods to a buyer for a price; when property passes immediately it is a sale, and when transfer is deferred or conditional it is an agreement to sell. This framework underpins trade and inventory finance, receivables…
A contract of agency creates a legal relationship where one person (the agent) is authorized to act on behalf of another (the principal) in dealings with third parties, binding the principal within the agent’s authority. This framework enables distribution partnerships, correspondent banking, syndications, and outsourced service models in finance. Definition Essential characteristics Rules Types of…
A contract of indemnity is an agreement where one party promises to compensate another for loss caused by specified acts or events, typically arising from the promisor’s conduct or that of a third person, and is widely used in banking for letters of indemnity, escrow, agency, custody, and transactional risk allocation. Meaning Rights of indemnity…
A contract is an agreement enforceable by law, formed when parties intentionally create legal obligations through offer, acceptance, and consideration under free consent for a lawful object. In banking, contracts underpin every product and service—accounts, loans, guarantees, securities, and digital mandates—so validity requirements must be embedded in documents and processes. Meaning of contract Key components…
A contract of pledge is the bailment of movable goods as security for payment of a debt or performance of a promise; the pledgor (pawnor) delivers possession while ownership remains, and the pledgee (pawnee) gains a limited, security interest with rights on default. This structure underpins core banking products like gold loans, pledge of warehouse…
A contract of bailment is the delivery of movable goods from one person to another for a specific purpose, with an obligation to return or dispose of them as directed after the purpose is fulfilled. In bailment, possession transfers, but ownership remains with the bailor. Meaning Essential features Bailor’s disclosure Bailee’s care of goods Mixing…
Contracts of guarantee play a significant role in banking and financial services, providing lenders an additional layer of security and assurance. This legal arrangement involves multiple parties and specific principles that safeguard both the creditor and the surety. For professionals in the banking sector and individuals dealing with credit facilities, understanding the nuances of a…
Registration of a partnership firm is not compulsory under law. However, the registration gives the firm a legal status. Section 69 makes claims arising out of a contract unenforceable if the firm is unregistered at the date of the institution of the suit. Thus, the major drawback of the non-registered partnership firm is that it…
