Answer

The statement “All contracts are agreements but all agreements are not contracts” is a fundamental principle of the law of contract. It means that every contract must first be an agreement, but every agreement need not become a contract. In other words, agreement is the wider (genus) concept and contract is the narrower (species) concept.

Contract = Agreement + Enforceability by law

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1. Meaning of Agreement

Under Section 2(e) of the Indian Contract Act, 1872 (and equivalent provisions of the Nepal Contract Act, 2056), an agreement is:

“Every promise and every set of promises forming the consideration for each other.”

A promise is made when a proposal is accepted. Therefore:

Agreement = Offer + Acceptance

Illustration:
A offers to sell his car to B for Rs 5,00,000. B accepts the offer. There is an agreement between A and B.

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2. Meaning of Contract

Under Section 2(h) of the Indian Contract Act, 1872:

“An agreement enforceable by law is a contract.”

So, an agreement must be legally enforceable to become a contract. If it is not enforceable, it remains a mere agreement.

Illustration:
A agrees to sell his car to B for Rs 5,00,000, and B agrees to pay. If all legal essentials are satisfied, it becomes a contract. If B fails to pay, A can sue B in court.

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2. Essentials of a Valid Contract (Section 10)

For an agreement to become a contract, the following essentials must be present:

1. Offer and acceptance
2. Intention to create legal relations
3. Lawful consideration
4. Capacity of parties
5. Free consent
6. Lawful object
7. Certainty of terms
8. Possibility of performance
9. Not expressly declared void by law
10. Legal formalities, where required

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3. All Contracts are Agreements

Since a contract is an agreement plus legal enforceability, it follows that every contract must necessarily be an agreement. There cannot be a contract without an agreement. Agreement is the genus and contract is the species.

Illustration:
A offers to sell his house to B for Rs 20,00,000. B accepts. This is an agreement. If it fulfils all essentials of Section 10, it becomes a contract. Therefore, every contract is an agreement.

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4. All Agreements are not Contracts

An agreement becomes a contract only when all the essentials of a valid contract are fulfilled. If any essential is missing, the agreement remains only an agreement and is not enforceable by law.

Illustrations:

(i) Social agreement:
A invites B to dinner. B accepts but does not attend. There was no intention to create legal relations. B cannot be sued. Hence, it is not a contract.
Balfour v Balfour is a leading example.

(ii) Agreement without consideration:
A promises to give Rs 1,000 to B as a gift. There is no consideration. It is not enforceable unless it falls under an exception. Hence, it is not a contract.

(iii) Agreement with a minor:
A minor agrees to buy a laptop from B. The agreement is void ab initio. It is not a contract.
Mohori Bibee v Dharmodas Ghose is the leading case.

(iv) Agreement without free consent:
A agrees to sell his land to B under coercion. Consent is not free. The agreement is voidable at A’s option. It is not a valid contract unless ratified.

(v) Unlawful object:
A agrees to pay B Rs 50,000 for smuggling goods. The object is unlawful. The agreement is void. Hence, it is not a contract.

(vi) Uncertain agreement:
A agrees to sell “some” rice to B. The terms are uncertain. It is not a contract.

(vii) Wagering agreement:
A and B agree to pay Rs 1,000 to the winner of a cricket match. It is a wager. It is void. Hence, it is not a contract.

(viii) Agreement in restraint of trade:
A agrees not to carry on business in a particular area. It is void under Section 27. Hence, it is not a contract.

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5. Distinction Between Agreement and Contract

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Conclusion

The statement is correct. Every contract is founded on an agreement, but an agreement becomes a contract only when it satisfies all the essentials of a valid contract under Section 10. If any essential is missing, it remains a mere agreement without legal remedy. Therefore, all contracts are agreements, but all agreements are not contracts.

Meaning of Transfer of Ownership

Transfer of ownership means the passing of the right of ownership (swamitwa) in a thing from one person (the transferor) to another (the transferee), so that the transferee becomes the owner and the transferor ceases to be one. Ownership is the fullest right a person can have over a thing: to possess, use, enjoy, and dispose of it. The Muluki Civil Code, 2074 (Muluki Dewani Sanhita Ain, 2074) governs the rules on ownership and its transfer, along with registration and contract laws.

Rules Regarding Transfer of Ownership

1. Transfer by the owner. Only the owner, or a person authorised by the owner, can transfer ownership. A person cannot transfer a better title than he has (nemo dat quod non habet); a transfer by a non-owner is generally ineffective against the true owner.

2. Valid agreement. Transfer by sale, gift or exchange requires a valid agreement: parties with legal capacity, free consent, lawful object and lawful consideration (for sale or exchange).

3. Subject matter. The thing must be capable of private ownership and of being transferred. Things that the law bars from transfer cannot be transferred.

4. Movable property. Ownership of movables ordinarily passes by agreement and delivery of possession; where goods are not yet ascertained, ownership passes only when specific goods are set apart for the contract.

5. Immovable property. Transfer must be in writing and completed by registration (rajinama) at the concerned Land Revenue or Land Survey office, with the new owner's name entered in the land ownership certificate (lal purja). Without registration the transfer does not give full ownership effective against third parties.

6. Transfer by operation of law. Ownership also passes without the owner's act: by succession on death (to heirs under the Civil Code), by court order or execution sale, by compulsory acquisition by the State for public purposes with compensation, and by long lawful possession where the law provides.

7. Co-owned property. A co-owner may transfer his own share, but cannot bind the other co-owners by transferring the whole property.

8. Conditions and risk. A transfer may be made subject to lawful conditions; the transferee bears the risk of the thing once ownership passes, unless otherwise agreed.

Conclusion

Under the Muluki Civil Code, 2074, ownership is transferred by the owner's lawful act, supported by a valid agreement, with delivery for movables and registration for immovables, or by operation of law. The guiding rule is that no one can transfer a better title than he himself has.

Who Can Refer a Dispute to Arbitration

Under the Arbitration Act, 2055 (1999) of Nepal, the following persons/parties can refer a dispute to arbitration:

1. Parties to a dispute (by agreement) — Any two or more persons or parties who have a written agreement to refer their present or future dispute to arbitration may refer the dispute to arbitration. The reference may be made:

   • by a separate arbitration agreement, or
   • by an arbitration clause contained in the main contract.

2. Parties to an international commercial dispute — Where at least one party is a foreign national or foreign company, the parties may refer the dispute to arbitration in Nepal or abroad.

3. Legal representatives / successors — If a party dies, the legal heir or representative of the deceased party's estate may refer or continue the arbitration. If a party is a firm or company, the firm or company itself may refer the dispute; and where the firm or company is dissolved, the person who has taken over its assets and liabilities may refer the dispute.

4. Person claiming through or under a party — Any person claiming rights through or under a party to the arbitration agreement (successor-in-interest) may refer the dispute.

5. Agent or authorized representative — A party may refer the dispute through a duly authorized agent or power-of-attorney holder.

6. Court (in certain cases) — Where a party files a suit in court in a matter covered by an arbitration agreement, the court may, on the request of the other party, refer the dispute to arbitration (Section 3 of the Act).

7. Arbitral institution — Where the parties have agreed to institutional arbitration, the dispute is referred through the concerned institution.

Essential condition: There must be a valid and written arbitration agreement between the parties showing their intention to settle the dispute through arbitration.

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Matters That Cannot Be Referred to Arbitration

Section 3 of the Arbitration Act, 2055 provides that the following matters cannot be referred to arbitration:

1. Matters of criminal offence — Criminal cases (e.g., murder, theft, fraud punishable under criminal law) cannot be referred to arbitration, because they affect public interest and the state is the prosecutor. Only the competent court has jurisdiction.

2. Matters relating to matrimonial disputes — Disputes concerning marriage, divorce, and matrimonial relations cannot be referred to arbitration. These involve personal status and are decided only by the court.

3. Matters relating to succession or inheritance — Disputes regarding inheritance (अंश) and succession cannot be referred to arbitration.

4. Matters of insolvency — Cases relating to insolvency/bankruptcy cannot be referred to arbitration.

5. Matters relating to the guardianship of minors — Disputes concerning the guardianship of a minor cannot be referred to arbitration.

6. Matters relating to the adoption of a child — Disputes regarding adoption cannot be referred to arbitration.

7. Matters expressly prohibited by law — Any matter which the law expressly provides shall be decided only by a court or a specified authority cannot be referred to arbitration.

(Note: The validity or existence of the arbitration agreement itself is not a Section 3 non-arbitrability ground; under Section 30 the arbitral tribunal may rule on its own jurisdiction, including objections as to the existence or validity of the arbitration agreement. Likewise, "public policy" operates as a ground for setting aside or refusing enforcement of an award under Section 34, not as a Section 3 exclusion.)

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Conclusion

Thus, only civil disputes of a private and commercial nature, where the parties have a valid written arbitration agreement, can be referred to arbitration. Matters involving crime, matrimonial status, inheritance, insolvency, guardianship, and adoption, as well as matters expressly reserved by law for a court or specified authority, are outside the scope of arbitration and must be settled by the competent court.

Critical Analysis of Bir Maya Limbu v. Rama Maya Limbu, NKP 2061

Nepal Kanoon Patrika (NKP) 2061 BS (2004-05 AD) reports this Supreme Court decision between two members of a Limbu family. The analysis below follows the method used for a case comment, and the facts and holding should be checked against the reported judgment before they are stated in an exam.

1. Facts. State the parties (appellant and respondent), their relationship, the property or right in dispute, the claim made in the lower court, and the decisions of the District and Appellate Courts.

2. Issues. Identify the question the Supreme Court had to decide: which provision of the Muluki Ain (General Code) then in force applied, and whether the parties' Limbu customary practice (Kipat and family custom) could displace the general statutory rule.

3. Arguments. Set out the appellant's and respondent's contentions, the statutory provisions and any earlier precedents each relied on.

4. Decision (ratio decidendi). State the holding of the Bench and the reasoning actually given, separating the binding principle from incidental remarks (obiter dicta).

5. Critical evaluation.

• Correctness of reasoning: was the provision interpreted according to its text and purpose, and consistent with earlier Supreme Court decisions?
• Equality and rights: does the result respect the equality of women and the right to property, especially in light of the Interim Constitution 2063 and the Constitution of Nepal 2072, which are later than the decision?
• Custom versus statute: did the Court give due weight to the customary law of the indigenous Limbu community, and does the decision balance custom with uniform national law?
• Clarity and precedent value: is the ratio clear enough to guide later courts, and was it followed, distinguished or overruled in later cases?
• Social impact: what is the effect on families, women and indigenous communities in similar disputes?

6. Conclusion. Sum up whether the decision is sound in law and fair in result, and what it contributes to Nepali jurisprudence on property and family disputes.

Short notes (any three)

a. Parties incompetent to contract

Under the Muluki Civil Code, 2074, a person can contract only if he or she has attained majority (18 years), is of sound mind and is not disqualified by law. Those incompetent to contract are:

1. Minors (below 18 years). An agreement with a minor is void and cannot be ratified after the minor attains majority. A minor may still be entitled to necessaries supplied to him, recoverable from his property.
2. Persons of unsound mind. A person who cannot understand the contract and judge its effect on his interests is incompetent. A person who is usually of unsound mind may contract during a lucid interval.
3. Persons disqualified by law, such as persons barred by a statute or court order, and a company or body acting beyond the powers in its constitutive documents.

Effect: the agreement is void as against the incompetent party, though the other party remains bound.

b. Doctrine of Frustration

Frustration means that a contract, valid when made, becomes impossible or unlawful to perform because of a supervening event beyond the control of both parties. The contract is then discharged. It rests on the maxim lex non cogit ad impossibilia (the law does not compel the impossible).

Essentials:

1. A valid, subsisting contract.
2. Performance becomes impossible or illegal after the contract is made.
3. The event is outside the parties' control (destruction of the subject matter, death or incapacity in a personal contract, change of law, war or natural disaster).
4. It is not caused by the fault of the party relying on it.

Effect: both parties are released from future obligations, and benefits already received must be restored or compensated.

c. Requisites of a valid tender

A tender is an offer by the debtor to perform his obligation. To be valid:

1. It must be unconditional and for the whole obligation, not a part.
2. It must be made at the proper time and place, and in business hours.
3. It must be made to the creditor or his authorised agent.
4. The promisor must be able and willing to perform, and the promisee must have a reasonable opportunity to inspect the goods or verify the offer.
5. For money, the exact amount due must be offered in legal tender; the creditor need not give change.

Effect: a valid tender of performance, if refused, releases the promisor from liability for non-performance and gives the creditor no right to sue for breach. A tender of money does not extinguish the debt itself.

d. Continuing guarantee

A guarantee that extends to a series of transactions, rather than a single one, is a continuing guarantee. It covers dealings between the creditor and the principal debtor until it is revoked or its stated limit is reached.

Features:

1. It covers a running or series of transactions.
2. The surety's liability is co-extensive with the principal debtor's, subject to any limit stated in the guarantee.
3. The surety may revoke it for future transactions by notice to the creditor, but remains liable for transactions already made.
4. The surety's death revokes it for future transactions unless the contract provides otherwise.

Example: A guarantees payment for goods B will supply to C from time to time, up to Rs 10,000. If A gives notice of revocation, A stays liable for goods already supplied but not for later supplies.

I don't have reliable, verifiable information about a specific Nepali case titled Anil Krishna Pokhrel v. Kathmandu District Court, NKP 2064 (Vol. 8, Decision No. 7444), and I can't confirm the facts, issues, holding, or the specific statutory provisions cited in the model answer. I also can't verify that this is a genuine leading precedent on res judicata in Nepali law as described.

Because I cannot confirm the accuracy or completeness of the model answer, and because giving a "corrected" full answer would require me to assert details about a case I cannot verify, I should not reply "OK" and should not fabricate a replacement answer.

If you can provide the actual NKP text or a reliable source for the case, I can then check the model answer against it and give you a proper corrected version if needed.

I need to be honest about a significant limitation here: I don't have reliable, verifiable access to the full text of Chhue Lama v. Ishwari Devi, NKP 2050 (Vol. 1, Decision No. 6041). The Nepal Kanoon Patrika is not a source I can retrieve or confirm details from with confidence. I cannot verify the facts, the specific reasoning, or the holding of this particular case as stated.

Because I cannot confirm the accuracy of the model answer against the actual judgment, I cannot certify it as "correct and complete." Producing a "corrected" answer would require me to fabricate details about a real case, which would be worse than acknowledging the gap.

What I can say with confidence is general Nepali easement law that such a case would likely engage:

• Under the Muluki Civil Code, 2074 (and previously the Muluki Ain), easements (सुविधा/सेवा) may arise by grant, by necessity, or by prescription (भोगाधिकार).
• A natural right concerns water flowing in its natural course; artificial discharge (e.g., roof-water via a spout) is not a natural right and requires consent or a valid easement.
• Prescriptive acquisition generally requires open, peaceful, continuous, and uninterrupted enjoyment for the statutory period, and it cannot be founded on an act that is itself unlawful or injurious.
• Assertion of right by the servient owner can interrupt the prescriptive period.

If you can provide the actual text of the NKP decision (or a scanned copy), I can examine the model answer against it and give you a properly verified correction. As it stands, I should not confirm the answer as correct, nor invent a substitute.

Capacity to Contract

Capacity to contract is the legal competence of a person to enter into a valid, enforceable contract. Under the Muluki Civil Code, 2074, a person has capacity if he or she:

1. has completed 18 years of age (the age of majority);
2. is of sound mind, able to understand the contract and its effects; and
3. is not disqualified by any law in force.

Persons lacking these qualities, such as minors and persons of unsound mind, cannot validly bind themselves by contract; they may act through a lawful guardian where the law allows.

Consequences of an Agreement with or by a Minor

Under the contract provisions of the Civil Code, 2074 the position is as follows.

1. Void agreement. A minor is not competent to contract, so an agreement made by a minor is void: it creates no legal obligation and cannot be enforced by or against the minor.
2. No ratification. Because the agreement was void from the start, it cannot be validated by the minor's later approval on reaching majority; a fresh contract is needed.
3. No personal liability. The minor cannot be sued for breach of such an agreement. The other party takes the risk of dealing with a minor.
4. Contracts through a guardian. The guardian or parent may contract on the minor's behalf for the minor's benefit and within the guardian's authority; the minor is bound by that contract only to the extent that it is for the minor's benefit.
5. Necessaries and benefit. A person who supplies necessaries (food, clothing, education, medical care) suited to the minor's condition in life can look to the minor's property, not to the minor personally. A minor may receive benefits (for example, accept a gift).
6. Restoration of benefit. Where the minor has obtained property or money under the void agreement, fairness requires its return or restoration as far as it remains with the minor, but this is not enforced as a contractual debt.
7. No estoppel. A minor who falsely claims to be an adult is generally not stopped from pleading minority.

Conclusion: An agreement with or by a minor is void and unenforceable against the minor, and the law protects the minor's property while still allowing necessaries and beneficial dealings through a guardian.

Termination (Discharge) of Contract

Meaning

Termination (discharge) of contract means the ending of the contractual obligation of the parties, so that they are no longer bound to perform it. A contract is said to be discharged or terminated when the rights and obligations created by it come to an end. After discharge, neither party can be compelled to perform the contract, though rights already accrued before discharge may still be enforced.

The Contract Act, 2000 (2056 B.S.) of Nepal deals with the discharge of contract mainly in Sections 66 to 71.

Modes of Discharging a Contract

A contract may be discharged in the following ways:

1. Discharge by Performance (Sec. 66)

When both parties perform their respective obligations exactly as agreed, the contract comes to an end. Performance must be complete and in accordance with the terms of the contract. Section 66 provides that a contract is discharged by performance when the promisor performs, or offers to perform, his obligation, and the promisee accepts such performance.

Example: A agrees to sell and deliver 100 bags of rice to B for Rs 50,000. A delivers the rice and B pays the price. The contract is discharged by performance.

2. Discharge by Mutual Agreement or Consent (Sec. 67)

The parties may, by mutual agreement, terminate the contract before it is performed. Section 67 recognises the following modes:

• Novation: Substituting a new contract for the old one, with new terms or new parties. The old contract is discharged and replaced by the new one.
• Rescission: Cancelling the contract by mutual consent, so that the parties are restored to their original positions as far as possible.
• Alteration: Changing some terms of the contract with the consent of all parties; the contract continues with the modified terms.
• Remission: Accepting less than what is due, or a different performance, from the promisor.
• Waiver: Giving up a right or claim under the contract voluntarily.

Example: A owes B Rs 1,00,000. B agrees to accept Rs 80,000 in full satisfaction. This is remission, and the contract is discharged to that extent.

3. Discharge by Impossibility of Performance (Sec. 68)

A contract becomes void when performance becomes impossible due to an event that the promisor could not prevent. This is also called supervening impossibility or frustration of contract. Section 68 provides that an agreement to do an impossible act is void, and if the impossibility arises after the contract is made, the contract becomes void when the act becomes impossible or unlawful.

Grounds include:

• Destruction of the subject matter;
• Death or incapacity of a party where personal skill is required;
• Change of law making performance unlawful;
• Outbreak of war;
• Non-existence of the state of things forming the basis of the contract.

Example: A contracts to supply goods from a godown which is destroyed by an earthquake. The contract is discharged by impossibility.

4. Discharge by Breach of Contract (Sec. 69)

When one party fails or refuses to perform its obligation, the contract is discharged by breach. Section 69 provides that when a party fails to perform its obligation, the aggrieved party may rescind the contract and claim compensation for the loss suffered. Breach may be:

• Actual breach: occurs at the time when performance is due.
• Anticipatory breach: occurs before the time of performance, when a party declares its intention not to perform.

Example: A agrees to sell his car to B on a fixed date but sells it to C instead. This is an actual breach, and B may claim damages. If A informs B in advance that he will not sell the car, it is an anticipatory breach.

5. Discharge by Operation of Law

A contract may be discharged by operation of law, such as:

• Death of a party where the contract is of a personal nature;
• Insolvency of a party, where the contract is discharged by order of the court;
• Merger, when a contract merges into a superior contract;
• Material alteration of the contract without consent;
• Lapse of time, when the period of limitation expires.

Example: A contracts to paint a portrait of B. If A dies before completing it, the contract is discharged by death.

6. Discharge by Remission of Performance (Sec. 70)

The promisee may remit the performance of the promisor, wholly or in part, or extend the time for performance. Section 70 provides that the promisee may accept a different performance or extend the time, and the promisor is discharged from the original obligation to that extent.

Example: A owes B Rs 50,000 payable on 1st January. B extends the time to 1st March. The original obligation is discharged and a new one arises.

7. Discharge by Promisee Neglecting or Refusing Performance (Sec. 71)

If the promisee neglects or refuses to afford the promisor reasonable facilities for performing the contract, the promisor is excused from performance. Section 71 provides that where the promisee neglects or refuses to afford the promisor reasonable facilities for the performance of the contract, the promisor is discharged from his obligation.

Example: A contracts to repair B's house, but B does not allow A's workers to enter the house. A is discharged from his obligation.

Conclusion

Thus, a contract may be terminated by performance, mutual agreement, impossibility, breach, operation of law, remission, and neglect or refusal of the promisee. The essential effect of discharge is that the parties are freed from further contractual liability, though accrued rights and remedies for breach survive.

Meaning of Carrier

A carrier is a person or business that undertakes, for reward (hire or freight), to transport goods or passengers from one place to another. The law of carriage is a branch of the law of bailment, because the carrier takes possession of goods entrusted to it and is bound to deal with them according to the terms of the trust. Carriers are mainly of two kinds:

1. Common carrier — one who holds himself out as ready to carry goods for any person who chooses to employ him, in the ordinary course of business, for a reasonable charge.
2. Private (special) carrier — one who carries only under a special contract with particular persons, and is not bound to serve the public generally.

Who is a Common Carrier

A common carrier is a person who:

• carries on the business of transporting goods for hire;
• holds himself out as willing to carry for all persons alike, without discrimination, so long as he has room and the goods are of the kind he professes to carry;
• does not carry under a special contract with each individual customer, but offers his services to the public at large.

Classic examples are railway companies, shipping companies, airlines, and public bus or goods transport services. A private carrier who carries goods only occasionally or only for selected persons is not a common carrier. Under Nepali law, the Carriage of Goods by Land and Air Act and the Contract Act, 2000 govern the rights and liabilities of carriers.

Rights of a Common Carrier

1. Right to charge freight — he is entitled to a reasonable remuneration (freight) for the service rendered, and may refuse to deliver the goods until freight is paid.
2. Right to lien — he has a particular lien over the goods carried for unpaid freight and expenses incurred on them.
3. Right to refuse dangerous goods — he may refuse to carry goods which are dangerous, explosive, or of a nature he does not profess to carry.
4. Right to demand disclosure — he may require the consignor to disclose the true nature and value of the goods, especially where the value is extraordinary.
5. Right to special contract — he may limit his liability by a special contract (e.g., fixing a maximum value) provided it is reasonable and not opposed to public policy.
6. Right to sue for freight — if the consignee fails to pay, he may sue the consignor or consignee as per the contract.
7. Right of indemnity — he is entitled to be indemnified by the consignor for loss caused by the dangerous or improperly packed goods of the consignor.

Duties (Liabilities) of a Common Carrier

1. Duty to carry — he must carry the goods of any person offering them, provided he has room and the goods are of the description he professes to carry. Refusal without lawful excuse is actionable.
2. Duty to carry safely — he is bound to carry the goods with reasonable care and skill and to deliver them safely at the destination. He is liable as an insurer of goods, i.e., liable for loss or damage even without negligence, subject to certain exceptions.
3. Duty to deliver at the proper time and place — delivery must be made to the consignee or his authorised agent at the agreed time and place; delay without excuse makes him liable.
4. Duty not to discriminate — he must treat all customers alike and charge uniform, reasonable rates, without undue preference.
5. Duty to follow instructions — he must carry and deliver the goods according to the consignor's instructions as to route, mode, and manner of carriage.
6. Duty to give notice — where goods are not accepted or the consignee cannot be found, he must give notice to the consignor and act reasonably in storing the goods.
7. Duty to account — he must account for the goods and pay the value of goods lost or damaged.

Exceptions to the Carrier's Liability (Act of God, etc.)

A common carrier is not liable for loss arising from:

• Act of God (e.g., earthquake, extraordinary flood);
• Act of the Queen's enemies (war, foreign enemy action);
• Inherent vice of the goods (e.g., perishable nature);
• Fault or fraud of the consignor (defective packing, misdescription);
• Loss during storage or delivery after the carriage is complete, if due notice was given.

Conclusion

Thus, a common carrier is a public transporter for hire who must serve all alike, and while he enjoys rights such as freight, lien, and refusal of dangerous goods, he bears the heavy duty of safe carriage and timely delivery, being liable as an insurer of the goods except in the recognised exceptional circumstances.

The Nepal Madhyasthata Ain, 2055 (Mediation Act, 1999) is the law that provides for the settlement of disputes by mediation (madhyasthata) through a neutral third person, as an alternative to prolonged court litigation. It was enacted alongside the Arbitration Act, 2055, to reduce the backlog of cases and promote quick, cheap and amicable settlement.

Major provisions

1. Mediation by agreement. Parties to a dispute may settle it through mediation by mutual consent, either before a case is filed in court or after filing, with the court's permission or referral. Participation is voluntary and rests on the parties' agreement.
2. Disputes that can be mediated. Mainly civil disputes in which the parties are free to compromise (such as disputes over property, contracts, tenancy, boundaries and family property). Matters involving public offences, State interest or rights that cannot be compromised are excluded.
3. Mediators. The parties choose a mediator (a single person or a panel) by agreement; the Act provides for lists of qualified, impartial persons from whom mediators may be selected, and the mediator must have no interest in the dispute.
4. Role and duties of the mediator. To act neutrally, hear both sides, help them identify issues and reach terms, and not impose a decision; confidentiality of what is disclosed is maintained.
5. Procedure. Notice to the parties, fixing of sittings, a limited time for completing the mediation, and a flexible, informal procedure not bound by strict rules of evidence.
6. Settlement. Where the parties agree, a written settlement (compromise) document is drawn up and signed by the parties and the mediator. It is binding on them and can be enforced like a decree of the court; if the case was in court, it is recorded and the case closes.
7. Failure of mediation. If no settlement is reached, the parties may pursue the dispute in court (or arbitration), and what was said in mediation cannot be used against a party.
8. Fees and expenses. Provision for the mediator's remuneration and costs, usually shared between the parties.

Significance. The Act institutionalised mediation in Nepal, laid the base for court-annexed mediation programmes, and was later reformed by a new Mediation Act (2068), which now governs mediation.

Short Notes

a) Tender (Attempted Performance)

Meaning: When the promisor offers to perform his obligation at the proper time and place, but the promisee refuses to accept the performance, the offer is called a tender or attempted performance. It is not actual performance, but the law treats it as equivalent to performance so far as the promisor's liability is concerned.

Essentials of a valid tender:

1. It must be unconditional — not subject to any condition.
2. It must be made at the proper time and place.
3. It must be of the whole obligation, not a part of it.
4. It must be made to the proper person (promisee or his authorised agent).
5. It must be made in the proper form — money must be legal tender, goods must be actually offered for inspection.
6. The promisor must be able and willing to perform.

Kinds: (i) Tender of money (tender of payment); (ii) Tender of goods or services (tender of performance).

Effect: If a valid tender is wrongfully refused, the promisor is discharged from further performance and need not perform again; he may sue for breach. But a tender of money does not extinguish the debt — the creditor may still sue for the money, though the debtor can plead tender to escape costs and interest.

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b) Finder of Lost Goods

Meaning: A finder of lost goods is a person who finds goods belonging to another and takes them into his custody. He is placed in the position of a bailee and stands in a fiduciary relationship towards the true owner. He has no right to treat the goods as his own.

Rights of the finder:

1. Right of lien — he may retain the goods until he is paid the reasonable expenses incurred in preserving the goods and in tracing the true owner.
2. Right to reward — if the owner has announced a specific reward for the return of the goods, the finder may sue to recover it.
3. Right to sell — he may sell the goods if (i) the goods are perishable, (ii) the owner cannot be found with reasonable diligence, or (iii) the owner refuses to pay the lawful charges of the finder. He must account for the proceeds to the owner.
4. Right to sue the true owner for compensation for expenses and services.

Duties and liabilities:

1. To take reasonable care of the goods as a man of ordinary prudence would take of his own goods.
2. To make reasonable efforts to find the true owner.
3. Not to appropriate the goods to himself or deny the owner's title.
4. Not to sell the goods except in the cases permitted by law.
5. To return the goods on demand and to account for the sale proceeds.

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c) Unpaid Seller

Meaning: Under the Sale of Goods Act, a seller is an unpaid seller when — (i) the whole of the price has not been paid or tendered, or (ii) a bill of exchange or other negotiable instrument has been received as conditional payment and the condition has not been fulfilled owing to its dishonour.

The term also includes any person in the position of a seller — an agent of the seller who has paid the price, a consignor, or a person who is himself liable for the price.

Rights of an unpaid seller:

(A) Rights against the goods (where property in the goods has passed to the buyer):

1. Right of lien — to retain possession of the goods until the price is paid.
2. Right of stoppage in transit — if the buyer becomes insolvent, to stop the goods while in transit and resume possession.
3. Right of resale — to resell the goods in the circumstances allowed by law.

(B) Rights against the buyer personally:

1. Suit for the price.
2. Suit for damages for non-acceptance.
3. Right to repudiate the contract before the due date of delivery (anticipatory breach).
4. Suit for interest.

Where property has not passed: the unpaid seller may simply withhold delivery of the goods.

Termination of lien: by delivery of goods to a carrier without reserving the right of disposal, by the buyer or his agent obtaining possession, by waiver, or by payment of the price.