Property Law in Business

8/8/2019 Property Law in Business

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LAW RELATING TO PROPERTIES IN

BUSINESS


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LAW RELATING TO PROPERTIES IN BUSINESS Juristically, the term property is used to denote the right of

ownership, the supreme right that can be exercised over

everything and against the whole world (Jus in rem)

According to John Austin ownership constitutes the right:

(i) Against the whole world,

(ii) Over a determinate thing,(iii) Indefinite as to point of user,

(iv) Unrestricted in point of disposition, and

(v) Unlimited in point of duration

Property can be classified into different categories, such as

Movable and Immovable Property; and

Tangible and Intangible Property.

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LAW RELATING TO PROPERTIES IN BUSINESSMOVABLE AND IMMOVABLE PROPERTY

Movable property is often referredto as goods. These aretransitory in character and consequently becomeconsumable items over a relatively shorter period of timeor liable to be speedily exhausted through usage and arenot the subject of perpetual or uniform enjoyment.

Immovable property on the other hand, is perpetual ormore indestructible in nature and is characterized byuniform continuity of use or enjoyment.

Under the English Law, immovable property is termed as

Real Property and the movable as Personal Property. In India, the movable property is dealt with by the Sale of

Goods Act, 1930, whereas the immovable property is dealtwith under the Transfer of Property Act, 1882

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LAW RELATING TO PROPERTIES IN BUSINESS

CONTRACT OF SALE MOVABLE PROPERTY

As per Sec.4(1) of the Sale of Goods Act, a contractofsaleofgoods is a contract whereby the seller transfers or agrees

to transfer the property in goods to the buyer for a price.

Such contract of sale may either be absolute or conditional.

Sec. 4(3)deals with the concept of an agreementto selland stipulates that where the transfer ofproperty inthe

goods is totakeplace at a futuretimeor subject to some

condition thereafter to be fulfilled, such a contract is an

agreement to sell.

The distinction between sale and an agreement to sell is

presented in the following slide:

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LAW RELATING TO PROPERTIES IN BUSINESSSALE AGREEMENT TO SELL

TRANSFER OF

PROPERTY

Sale is an executed contract. In

a sale, the property in thegoods passes from the seller to

the buyer immediately so that

the seller is no more the owner

of the goods sold.

An agreement to sell is an

executory contract. In anagreement to sell, the transfer of

property in the goods is to take

place at a future time or subject

to certain conditions to be

fulfilled.TYPE OF GOODS A sale can only be in case of

existing and specific goods.

An agreement to sell is mostly in

case of future and contingent

goods, although in some cases it

may refer to unascertained

existing goods.

RISK OF LOSS In sale, if the goods are

destroyed, the loss falls on the

buyer even though the goods

are in possession of the seller.

In an agreement to sell, if the

goods are destroyed, the loss

falls on the seller, even though

the goods are in the possession

of the buyer.

Contd..5


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CONSEQUENCES

OF BREACH

In sale, if the buyer fails to pay

the price of the goods or ifthere is a breach of contract by

the buyer, the seller can sue

for the price even though the

goods are still in possession.

In an agreement to sell, if there is

a breach of contract by the buyer,the seller can only sue for the

damages and not for the price

even though the goods are in the

possession of the buyer.

RIGHT TORE-SELL

In a sale, the seller cannot re-sell the goods. If he does so

the consequent buyer does not

acquire title to the goods.

In an agreement to sell, in case ofre-sale, the buyer, who takes the

goods for consideration and

without notice of the prior

agreement, gets a good title. In

such a case, the original buyer

can only sue the seller fordamages.

GENERAL &

PARTICULAR

PROPERTY

A sale is a contract plus

conveyance, and creates jus in

rem, i.e. gives right to the

buyer to enjoy the goods asa ainst the world at lar e

An agreement to sell is merely a

contract, pure and simple, and

creates jus in personam i.e.

gives a right to the buyer againstthe seller to sue for dama es.

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INSOLVENCY OF BUYER In a sale, if the buyer

becomes insolvent beforehe pays for the goods, the

seller, in the absence of a

lien over the goods, must

return them to the official

receiver or assignee. He

can only claim a rateable

dividend for the price of

the goods.

In an agreement to sell, if

the buyer becomesinsolvent and has not yet

paid the price, the seller is

not bound to part with the

goods, until he is paid for.

INSOLVENCY OF SELLER In a sale, if the sellerbecomes insolvent, the

buyer, being the owner, isentitled to recover the

goods from the official

receiver, or assignee.

In an agreement to sell, if

the buyer, who has paid

the price, finds that theseller has become

insolvent, he can only claim

rateable dividend and not

the goods because

property in them has notyet passed to him.7


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TRANSFER OF TITLE Property is transferred on transfer of title from the

seller to the buyer. For the transfer of a defect-lesstitle, the seller should have a good title to thegoods. Where there is a sale of goods by a personwho is not the owner or where a person sells goodswithout the authority or consent of the true owner,the buyer of such goods does not acquire a goodtitle. In such a case, the title of buyer is no betterthan that of the seller.

A acquired certain goods from C by falselyrepresenting that he was acting on behalf of Band was authorised to collect the goods. A latersold the goods to D. Held

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In another case the owner of a car delivered it to another for

repairs. The latter carried no repairs, but instead kept using the

car until he crashed it.

He then sold the car in the damaged state to an innocent buyer

for a nominal price.

The buyer got the car repaired at an expenditure of 200 pounds.

Held?


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SALE BY NON-OWNERS The general rule of law is that no one can give that which he

has not got. This is expressed in the Latin maxim Nemo dat quodnon habet. For eg., if A steals an article and sells it to B, B does not

become the owner of the article. It is only the owner of the goods, or

a person authorized by him, who can sell the goods. If any other

person sells them, the title of the buyer will not be better than that

of the seller. The following are the exceptions to the above rule:

1. Sale by a mercantile agent,

2. Sale under the implied authority of owner or title by estoppel,

3. Sale by one of several joint owners,4. Sale by a person in possession of goods under a voidable contract,

5. Sale by a seller in possession after sale,

6. Sale by a buyer in possession after he has agreed to buy; and

7. Sale by an unpaid seller. 10


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EXCEPTIONS The pawnee of goods is empowered to sell the goods

pawned, under certain conditions. (Sec. 178 of the Indian

Contract Act).

A thief or finder of a negotiable instrument endorsed in

blank or payable to bearer can give a good title to a person

who purchases it for value and without notice of the defectin title.

The finder of goods is empowered to sell the goods if the

true owner cannot be traced or where the goods are of a

perishable nature. He can also sell the goods, where thelawful charges incurred in respect of the goods amount to

two thirds of its value and the owner refuses to pay such

lawful charges.11


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CONDITIONS AND WARRANTIES Before a contract of sale is entered into, a seller frequently makes

representations or statements which influence the buyer to clinch

the bargain. Such representations or statements differ in characterand importance. Whether any statement or representation made

by the seller with reference to the goods is a stipulation forming

part of the contract or is a mere representation forming no part of

the contract, depends on the construction of the contract.

A stipulation in a contract of sale with reference to goods which

are the subject matter may be a condition or a warranty.

CONDITION A condition is a stipulation which is essential to the

main purpose of the contract. It goes to the root of the contract.Its non-fulfillment upsets the very basis of the contract.

WARRANTY A warranty is a stipulation which is collateral to themain purpose of the contract. It is not of such vital importance as a

condition.12


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UNPAID SELLER A seller is deemed to be an unpaid seller when

1. The whole of the price has not been paid or tendered;

2. A bill of exchange or other negotiable instrument has been

received as conditional payment, and the condition on which

it was received has not been fulfilled by reason of the

dishonour of the instrument or otherwise.

The following conditions must be fulfilled before a seller

can be deemed to be an unpaid seller:

1. He must be unpaid and the price must be due.

2. He must have an immediate right of action for the price.

3. A bill of exchange or other negotiable instrument was

received but the same has been dishonoured.

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RIGHTS OF AN UNPAID SELLER

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RIGHTS OF AN UNPAID SELLER

Against the goods Against the buyer personally

Where the

property in the

goods has passed

Where the property

in the goods has

not passed

Lien Stoppage

in transit

Re-sale

Withholding

delivery

Stoppage

in transit

Suit for

price

Suit for

damages

Repudiation

of contract

Suit for

interest


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BORROWINGS AGAINST PROPERTY AS SECURITYPLEDGE & HYPOTHECATION BANK ADVANCES

Pledged goods are stored in the godown under the lock andkey of the bank under the banks supervision. Thus they

remain under the physical possession of the bank.

However, hypothecated goods, strictly speaking are not

under the lock and key of the bank. They are allowed to bekept at the premises of the borrower without any lock and

key of the bank.

While pledged goods are in actual possession of the bank,

in hypothecation they are in actual possession of the

borrower.

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MORTGAGE OF IMMOVABLE PROPERTY

A mortgage is the transfer of an interest in specific

immovable property for the purpose of securing thepayment of money advanced or to be advanced by way of

loan, an existing or future debt, or the performance of an

engagement which may give rise to a pecuniary liability.

The transferor is called a mortgager, the transferee amortgagee; the principal money and interest of which

payment is secured for the time being are called the

mortgage money and the instrument (if any) by which the

transfer is effected is called a mortgage deed.

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ELEMENTS AND TYPES OF MORTGAGE A mortgage comprises the following elements:

i. Transfer of Interest;

ii. Specific Immovable Property;

iii. Security;

iv. Consideration or purpose;

v. Competence of parties; and

vi. Registration.

Sec. 58 classifies the mortgages into the following six types:

i. Simple mortgage [Sec.58 (b)]

ii. Mortgage by conditional sale [Sec.58 (c)]iii. Usufructuary mortgage [Sec.58 (d)]

iv. English mortgage [Sec.58 (e)]

v. Mortgage by deposit of title deeds [Sec.58 (f)]

vi. Anomalous mortgage [Sec.58 (g)] 17


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SIMPLE MORTGAGE Here, the mortgagor, without delivering possession of the

mortgaged property, gives a personal undertaking to the

mortgagee to repay the amount due under the mortgage.

The personal undertaking to pay may be either express or

implied. Thus in case of simple mortgage, the mortgagor

retains the possession of the property but agrees, expressly

or impliedly, that in the event of his failing to pay according

to his contract, the mortgagee shall have the right to have

the mortgaged property sold through the Court and the

proceeds of sale applied in payment of the mortgage-money to the extent necessary.

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MORTGAGE BY CONDITIONAL SALE This type of mortgage is a sale of the mortgaged property

with the superadded condition of repurchase by the

mortgagor of the mortgaged property by repaying the loan.

Thus the essential characteristic of a mortgage by

conditional sale are as follows:

1) The mortgagor has a right of redemption.2) When he repays the amount due, the sale becomes void.

3) If he makes a default in paying the amount due on the

stipulated date, the sale becomes absolute and binding.

4) There is no personal covenant on the part of the mortgagorto pay.

5) Delivery of possession of the property is not given to the

mortgagee.

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USUFRUCTUARY MORTGAGE The word usufuct means the right of enjoying the use and

advantages of another persons property. In case of

usufructuary mortgage, the mortgagor delivers possession

of the mortgaged property to the mortgagee, or expressly

or by implication binds himself to deliver possession of the

mortgaged property. He further authorizes the mortgagee

to receive the rents and profits accruing from the property

and to appropriate the same in lieu of interest and the

principal sum. The mortgagee cannot sue for the recovery

of the mortgage-money or for the sale of the mortgagedproperty; he can only retain possession of the property till

his mortgage-money is fully recovered. He has no personal

remedy against the mortgagor.

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ENGLISH MORTGAGE In case of an English mortgage, the mortgagor binds himself to

repay the mortgage-money on a certain date. He transfers the

mortgaged property absolutely to the mortgagee on thecondition that the mortgagee will retransfer the property to the

mortgagor upon payment of the mortgage-money. In case of

default by the mortgagor, the mortgagee is entitled to sell the

property without seeking the permission of the Court.MORTGAGE BY DEPOSIT OF TITLE DEEDS/EQUITABLE

MORTGAGE

Where a debtor delivers to a creditor or his agent documents of

title to property, with intent to create a security thereon, the

transaction is called a mortgage by deposit of title deeds or an

equitable mortgage. Such a mortgage can however be created

in the towns of Calcutta, Madras and Bombay and in any other

town notified by a State Govt. in this regard. 21


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ANOMALOUS MORTGAGE According to Sec. 58(g), a mortgage which is not a

simple mortgage, a mortgage by conditional sale, ausufructuary mortgage, an English mortgage or a

mortgage by deposit of title deeds within the

meaning of Sec. 58, is called an anomalous

mortgage.

An anomalous mortgage quite often is a

combination of two or more mortgages, eg., a

combination of a simple and a usufructuarymortgage or a combination of usufructuary

mortgage and a mortgage by conditional sale.

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DOCUMENTATION OF COMPANY ADVANCES

Copy of Board Resolution copy of the Board

Resolution is required to be obtained in thefollowing cases:

New Limits

Personal Guarantee of Directors

Renewal of Limits

Acknowledgement of Debt

Borrowing Limit

Standing as Guarantor

Memorandum and Articles of Association

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REGISTRATION OF CHARGES In case of all companies, some charges on their assets have to

be compulsorily registered with the ROC u/s 125 of the

Companies Act, 1956. such charges are: Charge including an equitable or legal mortgage on any

immovable property wherever situated.

Charge on book debts of the company.

Charge on moveable property like hypothecation (excludingpledge).

A fixed charge is a charge in some specific and identified assetof the company.

Floating charge is a charge on the assets (present or future) of a

company. The effect of failure to register within the stipulated period, any

of the charges requiring compulsory registration under the act,is that the charge will be void against the liquidator and/or anycreditor of the company.

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HIRE PURCHASE OF PROPERTY An agreement that fulfills the following conditions is

termed as a hire-purchase agreement:

The goods are delivered by the owner to a person on a

condition that the person receiving such goods should

pay the agreed amount in some timely installments.

The property in such goods is to pass completely to theperson who hires the goods on the payment of the last

installments only.

The person has the right to terminate the agreement at

any time before the property passes on.

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HIRE PURCHASE OF PROPERTYINGREDIENTS OF HIRE PURCHASE

HIRER :A person who acquires the possession of goods fromthe owner under a hire-purchase agreement is known as a hirer.

OWNER: A person who delivers the possession of goods to ahirer under a hire-purchase agreement is called the owner.

HIRE: Hire means the sum that is payable periodically by thehirer according to the hire-purchase agreement.

HIRE-PURCHASE PRICE: The hire-purchase price means thetotal sum payable by the hirer under a hire-purchase agreementto complete the purchase of or the possession of property in

the goods to which the agreement relates.

FORM OF HIRE-PURCHASE AGREEMENTS The hire-purchase agreements should be in writing and signed

by both the parties.26


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HIRE PURCHASE OF PROPERTYCONTENTS OF HIRE PURCHASE

The hire-purchase price of the goods.

The cash price of the goods at which the hirer may buy thegoods for cash.

The date of the commencement of the number of

installments by means of which the hire-purchase price isto be paid.

The amount that is paid in these installments.

The date when the installment is to be paid should be

mentioned and also the mode of calculation of the date. The name of the person to whom the payment of the

installment is to be made with the place where thepayment is to be made.

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HIRE PURCHASE OF PROPERTY LEGAL ASPECTS A hire purchase transaction was envisaged by the Hire-Purchase Act,

1972 but the Act was repealed in May, 2005. Hence the hire purchasecontracts are governed by the Indian Contract Act, 1872.

The property in the goods passes from the hire-vendor to the hire-purchaser only after the hire-purchaser has paid all of the stipulatednumber of installments.

The relation between the hire-purchaser and the hire-vendor is that

of a bailee and a bailor. As a result, the hire-purchaser has no right ofdisposal of goods till he becomes the owner.

If the hire-purchaser has taken as much care of the goods as isrequired to be taken by a bailee, he is not responsible for the loss ofthe goods.

If the hire-purchaser makes a default in payment of an installment,the hire-vendor gets the right to repossess the goods.

The hire purchaser can terminate the contract. He will return thegoods but will not be required to pay the remaining installments.However incases, he may be required to pay a sum not exceeding the

termination charges mentioned in the contract. 28


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LEASE OF PROPERTY Sec. 105 of the Transfer of Property Act 1882, defines a

lease as follows:

A lease of immovable property is a transfer of right to

enjoy such property, made for a certain time, express or

implied, or in perpetuity, in consideration of a price paid or

promised , or of money, a share of crops, service or anyother thing of value, to be rendered periodically or on

specified occasions to the transferor by the transferee, who

accepts the transfer on such terms.

The transferor is called the lessor, the transferee is calledthe lessee, the price is called the premium, and the

money, share, service or other thing to be so rendered is

called the rent.

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LEASE OF PROPERTYESSENTIALS OF A LEASE

Subject Matter: To constitute a lease, the subject mattershould be an immovable property and the same isgoverned under the provisions of the Transfer of Property

Act, 1882.

Transfer: A lease is a transfer of a right to enjoy and useproperty. This involves giving possession of the property to

the lessee.

Right to enjoy: In a lease the transfer of an interest in

specific immovable property extends only to the enjoyment

and use of the property.

Duration: The lease of immovable property must be for a

certain period, express or implied, or in perpetuity. 30


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LEASE OF PROPERTYESSENTIALS OF A LEASE.contd.

Exemption of leases for agricultural purposes: Sec. 117exempts leases for agricultural purposes from all the provisions of theChapter on Leases except in so far as the State Govt. may, bynotification published in the Official Gazette, declare all or any ofsuch provisions to be applicable to all or any of such leases.

Consideration: The transfer of a right to enjoy the property mustbe made for a consideration called premium. The consideration maybe a price paid at the time of the lease or promised to be paid atsome time in future as may be agreed upon between the parties. Itmay consist of money, a share of crops, service or any other things of

value, to be rendered, periodically or on specified occasions, and anyof these things so rendered is technically deemed as rent.Consideration of a lease may be either premium or rent or both.

Acceptance by the transferee: The transferee must accept thetransfer of a right to enjoy property on such terms as may be agreed

upon. 31


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LEASE OF PROPERTYPROCEDURE FOR LEASE

Sec. 107 prescribes the following modes of creating a lease:

Lease from year to year or for a term exceeding 1 year

A lease of immovable property from year to year or for any termexceeding 1 year can be made only by a registered instrument. Suchan instrument shall be executed by both the lessor and the lessee.

Lease reserving a yearly rent The lease reserving a yearlyrent refers to a lease from year to year, in the absence of any contractto the contrary. Such a lease can also be made only by a registeredinstrument.

Other leases All other leases may be made either by aregistered instrument or by oral agreement accompanied by deliveryof possession. The State Govt. may, from time to time by notificationin the Official Gazette, direct that these leases may be made by anunregistered instrument or by oral agreement without delivery of

possession. 32


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LEASE OF PROPERTYTERMINATION OF LEASE

Sec. 111 outlines the various ways of termination of lease,

namely: By lapse of time,

By happening of a specified event,

By termination of lessors interest,

By merger,

By surrender, By implied surrender,

By forfeiture, and

On the expiration of the notice to quit.

Notice for termination: A lease of immovable property foragricultural or manufacturing purposes shall be terminable onthe part of either lessor or lessee, by 6 months notice expiringwith the end of a year or the tenancy. A lease for any otherpurpose shall be terminable, on the part of either lessor orlessee, by 15 days notice expiring with the end of a month of

the tenancy. 33


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EXCHANGE When two persons mutually transfer the ownership of one

thing for the ownership of another, neither thing or both

things being money only, the transaction is called an

exchange (Sec. 118).

Exchange is thus a transfer of one thing for another. The

things exchanged may be movable or immovable, tangibleor intangible. On the execution of the exchange, each party

acquires a good title to the thing or property exchanged.

Examples:

Exchange of a car for 2 scooters. Exchange of a horse for a cow.

Exchange of a house for 10 hectares of land.

Exchange of currency notes for coins.

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EXCHANGEESSENTIALS OF A VALID EXCHANGE

Presence of two parties

Ownership of property must be exclusive ownership Theparties to the exchange should hold properties in their nameexclusively.

Mutual transfer of reciprocal estate to each other The

parties to the exchange should transfer the property mutually. Oneshould exchange the ownership of a property for the ownership ofanother in the exchange.

Transfer of a property includes movable and immovable butnot tangible.

Consideration for transfer is not price Any transfer ofproperty for a price amounts to sale under the Act.

Formalities of sale u/s 54 of the Transfer of Property Actshall be followed to complete the transaction of exchange.

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EXCHANGE When two persons mutually transfer the ownership of one

thing for the ownership of another, neither thing or both

things being money only, the transaction is called anexchange (Sec. 118).

Exchange is thus a transfer of one thing for another. Thethings exchanged may be movable or immovable, tangible

or intangible. On the execution of the exchange, each partyacquires a good title to the thing or property exchanged.

Examples:

Exchange of a car for 2 scooters.

Exchange of a horse for a cow. Exchange of a house for 10 hectares of land.

Exchange of currency notes for coins.

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ESSENTIALS OF A VALID EXCHANGE

Presence of two parties

Ownership of property must be exclusive ownership Theparties to the exchange should hold properties in their name

exclusively.

Mutual transfer of reciprocal estate to each other The

parties to the exchange should transfer the property mutually.One should exchange the ownership of a property for the

ownership of another in the exchange.

Transfer of a property includes movable and immovable but

not tangible.Consideration for transfer is not price Any transfer of

property for a price amounts to sale under the Act.

Formalities of sale u/s 54 of the Transfer of Property Act shall

be followed to complete the transaction of exchange.


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DIFFERENCE BETWEEN SALE AND EXCHANGE

Sale differs from exchange in that in sale, price is paid in money onlywhereas in exchange it is paid in goods or by transfer of property by way

of barter or partly in goods or property and partly in cash.

It is not an exchange if one of the items transferred is money, but is a

transaction of sale as the consideration is price. The instances for

exchange are: a house may be exchanged for a piece of land; or a piece

of land may be exchanged for some trees. In all the above-mentioned

situations where the ownership in the property (thing) is transferred in

consideration of the transfer of ownership in another thing, as such it is

an exchange. Otherwise, it amounts to a sale if one of the thingstransferred is money. But, if both the things transferred are money, then

it is an exchange. Rights arising in sale are different from those in

exchange.

GIFT


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GIFTGift is the transfer of certain existing movable or immovable property made

voluntarily and without consideration, by one person, called the donor, to another

called the donee and accepted by or on behalf of the donee.

The donor must be a competent person to gift. He should be a major, of sound mind

and not disqualified under law. Infants and insane are incompetent, as they lack the

legal capacity to contract. A minor can be a donee and his natural guardian on his

behalf can accept any onerous gift. According to Hindu Law, an idol is considered as a

legal person and as such can be a donee.

The acceptance of the gift must be made during the lifetime of the donor and while

he is still capable of giving. If the donee dies before acceptance, the gift is void.

Any gift of a movable property will be effective either by a registered instrument or by

mere delivery of the possession. But, the gift of an immovable property can be doneonly through a registered deed signed by or on behalf of the donor and must be

attested by at least two witnesses.

The gift cannot be revoked in general, but in case of fraud, misrepresentation, undue

influence or mistake, or by an agreement of revocation by the parties, it can be

revoked.

GIFT


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GIFTESSENTIALS OF A GIFT

1. Intentionto Donate the donor should have an intention at the

time of making a gift. A gift can be made to an ascertained person andany gift to a wrong person is invalid because there is no intention tobenefit any other person except an ascertained person. The donor willhave a motive or an objective to gift in favor of the donee such as loveand affection in case of relations or friends but these do not constitutethe pecuniary considerations and hence the gift is valid.

2. Transfer ofownership a gift requires transfer of certain existingmovable or immovable property. Unless the donor divests himself ofall the rights in the property and vests them into the donee therecannot be a valid gift.

3. Propertymust be inexistence a gift should be tangible, whichincludes movable or immovable property and should be in existence atthe time of making a gift. The Act does not deal with intangibleproperties such as Intellectual Property Rights. A gift in future propertyis also not recognized under the law. It must be transferable and mayinclude land, goods or actionable claims.

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GIFT

ESSENTIALS OF A GIFT.contd.

4. Voluntarytransferthe gift must be voluntary and the provisions

relating to the free consent under the Indian Contract Act, 1872, are

applicable. The consent should be free and should not be obtained by

coercion, undue influence, misrepresentation, fraud and mistake.

Undue influence is the most common ground in case of disputes

pertaining to gifts. The burden of proving that a gift was not inducedby undue influence etc. is on the donee.

5. Absenceofconsideration gift, which is a voluntary transfer ofcertain existing property, must be without consideration. If some

money consideration is involved, the transfer of property is a sale. Ifconsideration in the form of some movable or immovable property is

involved, it is an exchange. The term consideration here has thesame meaning as in the Indian Contract Act, 1872. It excludes natural

love and affection. Therefore, a transfer in consideration of natural

love and affection is a good gift. 41


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GIFT

ESSENTIALS OF A GIFT.contd.

6. Acceptan

ce bythedonee the gift must be accepted by thedonee otherwise it is not valid. Such acceptance must be given

during the lifetime of the donor and while he is still capable of

giving. If the donee dies before acceptance, the gift is void. The

acceptance of a gift by the donee may be express or implied. Where

the donee takes possession of the property, there is an acceptanceof the gift by the donee. Further, the acceptance may be made by

the donee or anyone on his behalf. For eg., a father may accept a

gift on behalf of his son. A minor may also accept a gift.

7. Delivery the gift of a property is complete only on registrationand followed by the delivery of possession. However, non-

registration of a gift will not affect its validity, as the gift is complete

when accepted by the donee and registration is only a procedure of

law.42


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ASSIGNMENT OF PROPERTY

Assignment is transfer of a claim or right or interest or

property (movable or immovable) from one person toanother.

The Transfer of Property Act, 1882 envisages transfer of

movable and immovable property through various modes,

such as sale, mortgage, lease, pledge, bailment etc.wherein interest in and possession of the property or

ownership in the property are transferred.

Transfer of interests in, other than the above transactions,

fall under Actionable Claims.

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ACTIONABLE CLAIMS

An Actionable Claim is defined in Sec. 3 as follows:

Actionable Claim means a claim to any debt, other than a

debt secured by mortgage of immovable property or by

hypothecation or pledge of movable property, or to any

beneficial interest in movable property not in the possession,

either actual or constructive, of the claimant, which the Civil

Courts recognize as affording grounds for relief, whethersuch debt or beneficial interest be existent, accruing,

conditional or contingent.

Simply stated, an actionable claim means a claim to

Any unsecured debt, or

Any beneficial interest in movable property not in the

possession of the claimant.

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ACTIONABLE CLAIMS The following are actionable claims:

a) A claim to recover arrears of rent due

b) A claim to the provident fund that is standing to the credit of amember of the PF and that has become due.

c) A claim under life insurance policy that has matured

ASSIGNMENT BYWAY OF SECURITY

To deal with an actionable claim by way of security amounts toan assignment.

A future debt may be transferred by way of security.

A debt is an obligation to pay a certain sum of money. To

become an actionable claim, it must be liquidated. Further itmust not be secured by mortgage of immovable property or byhypothecation or pledge of movable property.

An accruing or future debt is one which exists but is payable atsome future date.

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Date post:	09-Apr-2018
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Property Law in Business

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