Contract act

CONTRACT ACT

1. A mandate may not continue to be operative in cases of Death of agent, Lunacy of Agent,

Insolvency of Agent etc

2. The term ― Power of Attorney refers to An instrument by which one person i.e. Agent acts on

behalf of another i.e. Principal

3. Your customer Mr. Qureshi had executed a power of attorney in favour of Mr.Ahmed who operates

the account. You received a notice of death of Mr. Qureshi when a cheque signed by Mr. Ahmed is

presented for payment. Whether Cheque can be paid? Cheque should not be paid. (principal has died

– authority is derived from principal)

4. Mr. Modi maintains a current account in your branch which is operated by Mr. Jain in whose favour

Mr. Modi has executed a Power of Attorney. A notice about the death of Mr.Jain is received.

Subsequently a cheque signed by Mr. Jain is presented for payment. What action will be taken? May

be paid after clearance from Mr.Modi

5. A and B maintain a joint account which is operated independently. A serves a notice not to honour

any cheque drawn by B. Subsequently a cheque signed by B is presented for payment. Whether the

cheque can be paid? His cheque should not be paid

6. The current account of a minor is operated by his natural guardian. Whether the Bank can grant

an Overdraft? No.

7. A minor can be admitted to a firm as what? Beneficiary

8. If one of the defendants in a suit is a minor, whether he can be sued? He can be sued thro

his/her guardian

9. When customer hands over money to the bank for remittance, the relationship between customer

and banker is: Principal and agent

10. For recovering the dues the Bank can enforce the security by: Selling movable properties

pledged to it after giving due notice

11. Right of set off - It can be exercised even for time barred debts

12. What type of right available to a guarantor is not available to an Indemnifier? Right of

Subrogation.

13. The contract of insurance is a contract of Indemnity.

14. Right of lien/rights as pledge/right set off of a Banker are not barred by limitation.

15. The notice of assignment should be signed by Both by assignor and assignee

16. What is the consideration in the case of a guarantee? Any promise or act done for the benefit of

the principal debtor.

17. Government dues will have priority over pledged security. No. Pledge will prevail over

government dues provided there is no special act giving priority to government dues in that state.

18. The very important condition/feature of a pledge is: Prior notice of sale is a must in the case of

sale of pledged property

19. Do we have to exhaust all avenues against the Principal Debtor before proceeding against the

guarantor? No, we can proceed against any of them

20. Mr.X has given the guarantee on behalf of Mr.Y on 1/10/01. Your branch has invoked the

guarantee on 1/10/2003. The last date of filing suit is: 1-10-2006.

21. There are 2 loan accounts of the same borrower with different guarantors. To recover through

court of law- Two different suits should be filed.

22. The guarantor of defaulted account is navy personnel. What amount can be recovered from him?

Salary of Navy personnel is not attachable.

23. Guarantee is defined under which act? Contract Act.

24. Assignment to be valid legally Must be in writing

25. Whether the Bank can exercise its lien on the Credit balance in the loan account? YES.

26. The essence of the Right of Set Off is that Mutual claims of debtor and creditor can be merged

and only the remainder is Payable by the debtor/creditor

27. Whether the Creditor can proceed against the surety at his will? No.

28. Bank has got a right to take possession of movable securities hypothecated to us in the event of

default of the borrower on account of Hypothecation agreement

29. Can the Illiterates, Minors; Married Women are competent to endorse an instrument? YES.

30. The transactions relating to safe custody of articles are governed by The Indian Contract Act

31. The important requirement of a valid guarantee executed by Central/State government is that: It

should be executed on behalf of the President or Governor as the case may be

32. When the bank carries out standing instructions for paying insurance premia it acts as An agent

33.Actionable claim means A claim to any debt other than the debt secured by hypothecation, pledge

or mortgage.

34.Whether consideration is required in case of an assignment? Consideration is not essential in case

of an assignment.

35. Whether Claims of debt secured by mortgage can be assigned? No. Claims of debt secured by

mortgage can not be assigned.

36. Whether Assignment of a debt should be in writing? YES. It should be in writing.

37. Who can create a valid pledge? Owner of the goods and the Agent of the owner can create a

valid pledge.

38. When the bank takes possession of hypothecated goods, it is converted into Pledge.

39. Whether an agreement of Hypothecation or Pledge can be attested? No. It should not be

attested.

40. Whether the power to sell without the intervention of the court In case of a pledge/

hypothecation/an English mortgage is available?

YES. The power to sell without the intervention of the court is there even beyond limitation.

41. Whether we can proceed against either the borrower or the guarantor reserving the right to

proceed against the other subsequently?

YES. We can do so with the leave of the court under Order 2 Rule 2 of CPC

42. If court appoints a guardian then when shall a person attain majority? On completion of 18 years

of age

43. While computing the age of majority of a person domiciled in India which of the following shall be

taken into account.

The day on which he was born is to be included as a whole day and he shall be deemed to have

attained majority at the beginning of 18th anniversary of that day