Appropriation of payment appropriation of payment made by a debtor to the creditor

[Xpert]

View more random threads:

• Who are the persons by whom contract may or must be...
• Discuss in detail rights and duties of an agent
• What is the effect of a mistake upon a contract
• Define consideration, when consideration or object of an...
• Describe the various modes in which a contract may be...
• What are the essentials of a valid contract? Discuss them...
• essentials of valid contract
• What is undue influence what is its legal effect on a...
• What is fraud? What is the suggestion of a fact not fraud...
• What is contract of bailment when and how can it be revoked

Appropriation of payment

Q. Explain the rules which govern the appropriation of payment made by a debtor to the creditor. (2001)
1. Introduction:
When a debtor owes several distinct debt to a creditor and makes a payment which is insufficient to the whole debt the question arises to which debt the payment is to applied. Section 59 to 61 provide the rules which governs the appropriation of payment made by a debtor to the creditors.
2. Rules which govern appropriation of payment:
Following are the rule which govern appropriation of payment:
(I) Appropriation by debtor:
The first rule which governs the appropriation of payment is laid down in sec 59. It confers the right of appropriation upon the debtor.
According to this sec.
Where a debtor, owing several distinct debt to one person, makes a payment to him, either with express intimation, or under circumstance implying, that the payment is to be applied to the discharge of some particular debt, the payment if accepted, must be applied accordingly.
Application f rule:
This principal applies to several distinct debt and not a single debt payable by installments.
Example:
A owes to B other debt, the sum of 5000 Rupees B writes to A and demands payment of this sum. A sends to B 5000 Rupees. This payment is to be demanded payment.
(II) Appropriation by creditor:
The second rule is laid down in sec 60, which enables the creditor to make appropriation payment according to this section. “Where the debtor has omitted to intimate, and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt the payment actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in-force for the time as to the limitation of suits.
Example:
A owes several debt to B. one of them Rs. 2 Lac is time barred. A sends Rs. 4 Lac to B without indicating to which debt the amount is to be appropriate Rs 2 Lac against the time barred debt.
(III) Appropriation by law
The third rule is in sec. 61.
When neither party makes any appropriation of payment shall be applied in discharge of the debt in order of time, whether they are or are not barred by the law in force for the time being as to the limitation of the suit if the debt are of equal standing the payment shall be applied in discharge of each appropriation.
Application:
It applies when neither party makes an appropriation. In this situation the law gets the right to appropriate the payment.
Example:
A owes two debts of Rs 4 Lac each which are time barred and another debt of 8 Lac to B. A sends Rs 4 Lac. Neither party makes any appropriation of Rs 4 Lac would be appropriated rate-ably against two debt of Rs 4 Lac each which are time barred.
3. Conclusion:
To conclusion it can be said that, under contract act 1872. Sec 59 to 61 provide the rules which governs the appropriation of payment made by a debtor who owns a number of distinct debts to his creditor.

Sponsored Links