Special Contracts 2023

Special Contracts
•Indemnity and
Guarantee •Bailment
•Pledge
Indemnity
• A contract by which one party promises to
save the other party from any loss caused by
the conduct of promisor himself or any other
person is called contract of Indemnity. S 124 •
Two parties
• All essentials of valid contract apply •
Indemnified can claim only on suffering loss
Guarantee
• It is a contract to perform the promise or discharge the
liability of a third person in case of his default. S 126. •
Can be oral or in writing
• Consent of parties
• At the request of the debtor
• Primary liability lies with principal debtor
• Can be prospective or retrospective
• Liability of surety arises only on default by principal
debtor
• Consideration is something done for he benefit of
principal debtor
Types of Guarantee
• Specific
– Whole or part of a debt
• Continuing
– Can be revoked by:
• Notice
• Death of Surety
• Any variation/ alteration in terms of contract
• Creditor’s act of omission
• Novation
• Release / discharge of principal debtor
• Loss of security
Rights of surety/ Guarantor
• Against Creditor
• Ask to sue the debtor
• Ask creditor to terminate principal debtor’s services
• Claim to any set off
• Access to the securities of debtor with creditor
• Right to share reduction
• Against Principal debtor
• Right of subrogation
• Right of indemnity
• Compel the principal debtor to perform promise
• Against co-sureties
• Right to share securities proportionately
• Right to contribution
• Right to plead co-sureties and principal debtor in one suit •
Co-sureties are jointly and severally liable in India
Discharge of Surety
• Hewison V Ricketts (1894)- Hire purchase
installments
– (repossessed vehicle, can’t sue surety)
• Compounding or extending time for payment
• Release of one of co-sureties- no relief for
others
• Guarantee is invalid when:
• Obtained by misrepresentation
• Concealment
• Failure of co-surety to join
• Failure of consideration
Indemnity Vs Guarantee
• Two parties person to obtain loan,
• To compensate loss • employment etc. Is meant
Liability of for security of debtor
indemnifier is • Liability of guarantor is
primary secondary
• Acts independently • No • Guarantor acts upon the
right to sue any one request of the debtor
• Three parties • Right to sue the debtor
• Purpose is to enable the after discharge of the debt
Bailment
• A bailment is the delivery of goods by one person to another,
for some specified purpose, and upon a contract that they
shall, when the purpose is accomplished , be returned or
otherwise disposed of according to the directions of person
delivering them. S148
• Finder of goods as a bailee
• Possession of goods change
• No change in ownership
• Delivery for specified purpose
• Applies only to movable property
• Is money called as Goods?
• Gratutous and non-gratutous bailment
• Bailor has right to
• Restoration of goods
• Increased share of profits
• Claim for compensation
• Bailor has duty to:
• Disclose the fault in goods
• Repayment of extraordinary expenses
• Responsibility for lack of title
• Receive back goods
• Bailee is
– Entitled to:
• Receive compensation
• Remuneration
• Particular lien- providing service applying skill
• General lien
• Claim compensation in case of faulty goods
– Liable to:
• Duty of reasonable care
• Not to make unauthorised use of goods
• Not to mix goods with others’ goods
• Bailment contracts terminates with: – Lapse of
time
– Death
– Premature termination in case of gratutous
bailment
Pledge
• Pledge is a bailment of goods as security of payment of debt or
performance of promise. S172
• Satisfy all the elements of bailment contract
• Pledgee is entitled to
• Retain the goods
– Security for other debts not allowed
• Recover extraordinary expenses
• Civil suit
• Sale after notice
– Sale after court suit not allowed
• Receive compensation for non-disclosed faults in goods
• Remedies as owner of goods
• Pledgee is liable to;
• Reasonable care
• Not to make unauthorised use
• Return of goods and profit there of
• Not to set up adverse title
• Pledger is entitled to:

• Redemption
• Receive notice of sale
• Receive profit arising out of goods
• Receive surplus
• Take action against conversion
• Pledge by non-owner
• Mercantile agent
• Person in possession under voidable contract
• Pawner who has a limited interest
• Co-owner
• Seller in possession after sale
• Buyer in possession before purchase

Special Contracts 2023

Uploaded by

Copyright:

Available Formats

Special Contracts 2023

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Special Contracts 2023

Uploaded by

Copyright:

Available Formats

Special Contracts

• Pledger is entitled to:

You might also like