SPECIFIC CONTRACTSUNIT 4LLB IBPOC

Sections124 TO 238

Contract of Indemnity (Sec 124) A contract of indemnity is a contract by

which one party promises to save the other from loss caused to him by the conduct of promisor himself, or by the conduct of any other person .

A Security against any anticipated loss

It depends on the happening of the loss

It may be express or implied from the circumstances of case. considered as general class of contingent contracts.

EX:- A contracts to indemnify B from consequences of any

proceeding C may take against him in respect of sum of money 1000Rs.

Indemnifier (Promisor)??

Indemnity Holder (Promisee)????

Essentials

Must contain essentials of valid contract.

Indemnity holder must have suffered a loss

Rights

Indemnity Holder

Damages Costs All Sums Suit for specific

performance

Indemnifier

Analogous to rights of Surety

Contract of Guarantee

A Contract of guarantee is a contract to perform promise , or discharge the liability of a third person in case of his default.

Guarantee may be either oral or written, express or implied.

To invoke guarantee contract “Default” is must. Also known as contract of Suretyship. Something done or promise made for benefit of

principal debtor is considered as CONSIDERATION.

Parties ????

(1)Principal debtor (2) creditor (3)Surety

Tripartite Agreement Every contract of guarantee has three

agreements,Between Creditor & Principal DebtorBetween Surety & the creditorBetween surety & the principal debtor

Essentials

Existence of debt which must be recoverable.

Three parties in a contract of guarantee. A promise to pay debt in case of default. Consideration Liability must be legally enforceable. Must have all the essentials of a contract.Bank Guarantee???

Distinction

Two parties Liability is primary Dependant on

contingency Only one contract Objective is security No right to sue third

party for loss suffered

Three parties Liability is secondary Existence of debt Three contracts Objective is Surety Can sue the principal

debtor

Contract of Indemnity Contract of Guarantee

Discharge of surety

1. By revocation2. By variance3. By death of surety4. Composition, Extension and promise not to sue5. Discharge of principal debtor6. By imparting surety’s remedy7. By loss of security8. By novation 9. By misrepresentation10. On failure of consideration

Exceptions

Surety is not discharged for transaction prior to notice or death

Entry of creditor with the third party to not to sue the debtor.

Invalid Guarantees

1.Guarantee by misrepresentation2.Guarantee by Concealment3.Guarantee that co surety shall join4.Essential elements are absent

Rights of surety

Right of subrogation Right to benefit of creditor’s securities Right to indemnity Right of equality in case of Co sureties.

Bailment & Pledge

Bailment (sec 148)A bailment is the delivery of goods by one person to

another for some purpose upon a contract that they shall when the purpose is accomplished be returned or otherwise disposed off according to the directions of the person delivering them.

Ex- A delivers his radio to B for repairs. Bailor Bailee Custody of goods without possession can not be called as

bailment. Ex- A servant

Essentials Contract Delivery of goods and change of possession For specific purpose Movable goods Return of specific goods

Kinds of Bailment• Gratuitous bailment•Bailment for reward and remuneration•Pledge

Bailee

To take reasonable care of the goods

Not to make unauthorized use of goods

Not to mix the goods bailed with his own goods

Return the goods bailed Not to create adverse title To return the goods with

accretion

Right to lien Right against third party Right to recover

damages from detect of goods

Right to claim for extra ordinary expenses

Duties Rights

Bailor

To disclose all the known defects

To bear the extra ordinary expenses of bailment

To receive back the goods

Bailor’s responsibility to bailee

Avoidance of contract Return of goods Compensation from a

wrong does Enforcement of rights

Duties Rights

Lien A lien is a right of any person to retain that which

is in his possession belonging to another until certain demands of a person in possession are satisfied.

Does not include right to sale. Possession is essential to create a right of lien. Lien may arise by 1.Statute 2. Express or implied 3. in ordinary course of dealings Types of Lien1. General Lien2. Particular or Specific Lien

Pledge

The bailment of goods as security for payment of a debt or performance of a promise is called “Pledge". The bailor in this case is called the pawner pledger. The bailee is called the “Pawnee”or pledgee.

Ex:- Bailment of jewellary is pledge.

Pledge is a kind of bailment.

Rules of bailment are applicable to pledge.

Essentials

The goods must be delivered as security for payment of debt

There must be actual or constructive delivery. Only movable goods can be pledge. Transfer of possession is essential.

Difference

Lien is a personal right of retention and does not have right to sale.

In pledge Sale on default is incident.

Rights

Rights of Pawnee1. To retain performance of promise, interest on debt2. To recover extra ordinary expenses3. Right on pawnor’s default

Rights of Pawnor1. Right of redemption2. Preservation and maintenance3. To receive back the goods

Pledge by non owner

Pledge by mercantile agent Pledge by a person in possession of goods

under voidable contract Pledge by a person with limited interest. Pledge by co owner in sole possession Pledge by seller or buyer in possession after

sale.

Law of Agency

Agent is a person employed to do an act for another or to

represent another person while dealing with the third party. Principal The person for whom such act is done for whom

he is representing is called principal.

Who can be Agent & Principal???????????Consideration is not required to appoint an agent.Capacity to employ / to be employed as Agent.

How Agency is constituted?

Agency by Agreement (Express / Implied) Agent by necessity Where one is compelled to act an agent

without authority of other Agency by estoppels or by holding out No real authority it is created by estoppel Agency by operation of law Partnership is implied agency Agency by ratification Accepting a past act of an agent

Rules governing Ratification Act must be done by person on behalf of another. Act done without authority Act done must have legal existence. Ratification can be expressive or implied. The act to be ratified must not be void ab initio. Principal must be competent to ratify. Ratification must be done within a reasonable time It must be communicated. It can be for whole contract It should not put third party to damages.

Classification of Agents Specific or Particular Agent General Agent Mercantile Agent

1. Broker2. Commission Agent3. Factor4. Auctioneer5. Del Creder Agent Sub Agent Co Agent Substitute Agent

Termination of Agency

By Act of Parties1. By Agreement2. By Revocation3. By renouncing4. By performance

By Operation of Law1. By Death or insanity2. By insolvency of the principal

Duties & Liabilities of Agent

To conduct principal’s business Conduct business with skill & diligence To render proper accounts To pay sums received for principal To communicate with principal On principal’s death or insanity Not to deal in his own account Use of information Secret profits Adverse title

Duties & Liabilities of Agent (contd) Not to delegate Liable for acts of sub agents For misrepresentation or fraud To damages For misconduct

Rights of Agent

Right of retainer Right to claim remuneration Right of Lien Right to indemnity Compensation To do lawful things In emergency To appoint Substitute Agent To renounce agency Compensation for premature revocation

Duties & Liabilities of Principal

To indemnify agent Compensate agent for injury caused To pay remuneration and dues Misrepresentation or fraud by agent On contracts entered by agent with third

person On notice given to agent Where principal induces third persons to

believe that agents unauthorized acts were authorized

Rights of principal

To repudiate contract To claim benefit To ratify or disown agent’s acts To revoke agent’s authority To claim loss or profit

Agent when personally liable?

Where the principal is a foreigner Where Principal is undisclosed Where principal is disclosed though cannot

sue Agent makes himself Expressly liable Agency coupled with interest Personal Liability of an agent by custom Where an Agent acts beyond his authority Pretending Agent

References

http://www.slideshare.net/tabrezahmad/specific-contracts

http://www.slideshare.net/vikramsankhala/contract-ppt

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