Appropriation of the amount remitted by a customer

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Querist : Anonymous

Querist : Anonymous (Querist)

13 September 2010 As per law, if a customer remits an amount with out specifying any invoice reference, the seller can appropriate to any invoice.
But if the customer specifies invoices against which the amount remitted can be appropriated, the seller can refuse receive the amount. But if he receives the amount he has to adjust the amount only to the invoices mentioned by the customer.

I have forgotten the Act in which it is specified.
Will you please advise me the relevant provisions.

Querist : Anonymous

Querist : Anonymous (Querist)

13 September 2010 If anyone can help me.Pl help me.

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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14 July 2024 The principles you're referring to are typically governed under the provisions of the Indian Contract Act, 1872. Specifically, Sections 59 to 61 deal with the appropriation of payments. Here’s a brief overview of these sections:

1. **Section 59 - Application of Payment by Creditor**: According to this section, where a debtor owes several distinct debts to one creditor, he may, in the absence of any specific directions, apply any payment made by him to the discharge of any debt which he may think proper.

2. **Section 60 - Application of Payment where Debt to be discharged is Indeterminate**: This section states that where the debtor has omitted to intimate and there are two or more debts due by him to the same creditor, the payment shall, in the absence of any appropriation by the debtor, be applied to discharge the debts 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 suits.

3. **Section 61 - Application of Payment where neither Party Appropriates**: This section specifies that where neither party makes any appropriation, the payment shall be applied in discharge of the debts 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 suits.

These sections deal with the general principles of how payments are to be appropriated in the absence of specific instructions from the debtor (customer). The key points are:

- If the customer remits an amount without specifying any particular invoice or debt, the seller (creditor) can appropriate the payment to any outstanding invoice or debt as they see fit.
- If the customer specifies the invoices or debts against which the amount should be appropriated, the seller must comply with those instructions. However, if the seller accepts the amount without objection, they are bound to adjust it only to the invoices mentioned by the customer.

These principles ensure clarity and fairness in the allocation of payments between parties where multiple debts or invoices are involved. For precise application in specific legal matters, consulting with a legal professional or referring directly to the relevant sections of the Indian Contract Act, 1872, would be advisable.

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