Special Contracts: Indemnity; Guarantee; Bailment and pledge; Agency.

Posted on Apr 13 2016 - 1:46pm by Preeti

Special Contracts

Indemnity

The term ‘Indemnity` Simply means ‘Making Somebody Safe` or ‘Paying Somebody back`.

Section 124 of contract Act defines that ‘‘A contract by which one party. Promises to save the other from loss caused to him by the conduct of the promise himself by the conduct of any other person, is called a conduct of indemnity”.

The party who gives indemnity or who promises to compensate for or to make good the loss, is called. Indemnifier and the party for whose protection or safety the indemnity is given or the party whose loss is made good is called ‘Indemnified’ or ‘indemnity holder’. Important features of an indemnity contract –

  1. Two party.
  2. Promises for pay compensation of loss/damage.
  3. Loss/damage may be the own or other person.
  4. Creation of liabilities.
  5. It must be faith.
  6. All essential features of valid contract.
  7. Compensation for actual loss/damage.
  8. It may be express or implied. Loss/damage may be caused by some event, or accident, or some natural phenomenon or disaster.

Rights of Indemnified (Indemnity-Holder) 

  1. Rights to claim for all damages/losses.
  2. Rights to claim for all costs which is related to contract.
  3. Rights to claim for all sums which his may have paid for contract.

Liabilities/Duties of Indemnified 

  1. Liabilities to pay all damages/losses.
  2. Liabilities to pay all costs related to contract.
  3. Liabilities to pay all sum which is received by sell for contract from indemnified.

Guarantee Contract

The object of the contract of guarantee is to enable. A person to obtain an employment, or a loan, or some goods or service on credit.

According to section 126 of the contract Act ‘‘A contract of guarantee is a contract to perform the promise, or discharge the liability, of a third person in case of his default.”

The person who gives the guarantee is called the ‘Surety’ or ‘guarantor’ & the person in respect of whose default the guarantee is given is called the principal debtor or he is the party on whose behalf. Guarantee is given and the person to whom the guarantee is given is called the ‘Creditor’.

Essential features of a Guarantee Contract

  1. Three parties
  2. Three agreement
  3. Concurrence of the three parties
  4. Control may be experts or implies
  5. It may be oral or written
  6. Liability of surety is secondary is dependent on principal debtor’s default.
  7. Guarantee must be in the knowledge of debtor.
  8. All essential of a valid contract.
  9. Guarantee must not be obtained by means of misrepresentation.
  10. Existence of a primary liability.

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B.Tech Biotechnology,MBA(HR and Marketing), UGC/CBSE NET Qualified

13 Comments so far. Feel free to join this conversation.

  1. Vrinda May 15, 2016 at 11:39 am - Reply

    Nice notes

  2. BHAVESH TIWARI September 26, 2016 at 9:13 pm - Reply

    Amazing notes, covering almost all points of the topics.

    Some points may be further added:-

     DEFINITION OF INDEMNITY AS PER ENGLISH LAW
     INDEMNITY AND INSURANCE
     CLAIM OF LOSS BEFORE PAYMENT
    – Usman Jamal vs. Gopal Purushottam, 1928 ILR, Kolkata
     METHOD OF CREATING INDEMNITY OBLIGATIONS
     SITUATIONS OF TYPES OF INDEMNITY CREATION
     LIABILITY OF INDEMNIFIER
     COMMENCEMENT OF LIABILITY OF INDEMNIFIER
     DOCUMENTS AGREEMENTS OF INDEMNITY

     LIABILITY OF SURETY
     RIGHTS OF SURETY
     POSITION OF MINOR
     LETTER OF CREDIT OR BANK GUARANTEE
     SURETY AS FAVOURED DEBTOR
     Brikmyr vs. Darnell
     CONTINUING GUARANTEE – Durga Priya Choudhary vs. Durga Pada
     EXTENT OF SURETY’S LIABILITY S.128

     FINDER OF GOODS AS BAILEE
     ACTUAL DELIVERY AND CONSTRUCTIVE DELIVERY (Fazal vs. Salamat Rai)
     RIGHT TO DISPOSE OF THE GOODS
     BAILMENT AND HIRE PURCHASE

     PLEDGE BY CERTAIN SPECIFIED PERSONS MENTIONED IN THE INDIAN CONTRACT ACT

     KINDS OF AGENTS AND AGENCIES
     DISTINGUISHEMENT BETWEEN AGENT AND SERVANT
     LIABILITY OF PRINCIPAL FOR AGENT’S MISCONDUCT AND TORT
     LIABILITY OF PRINCIPAL AND AGENT BEFORE AND AFTER TERMINATION

    *Over all the notes are superb…….!!!

    • Preeti September 27, 2016 at 10:13 am - Reply

      hi
      I really appreciate you taking the time to comment…Suggestions and new ideas are always welcome. I’ll try to add these points to this topic.

      • BHAVESH TIWARI September 30, 2016 at 9:14 am - Reply

        Thanks for being optimist 🙂

  3. Sanjay jomy October 31, 2016 at 3:16 am - Reply

    This is so amazing notes helps to know the whole objects ina topic good work👏👏✋👌

    • Preeti November 1, 2016 at 5:55 am - Reply

      Thanks 🙂

  4. RJ Ajith November 3, 2016 at 6:19 am - Reply

    Thanks… nice notes…

  5. Santhi August 6, 2017 at 2:48 pm - Reply

    Really it is very useful….Tq so much😊

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