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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