ISLAMIA COLLEGE OF SCIENCE AND COMMERCE

Assignment on:
Contract of Indemnity Contract of Guarantee Difference between Contract of Indemnity and

Contract of Guarantee
Bailment: Meaning and its Essentials

Submitted to:
Dr. Tabassum Nazir

Submitted by:
Aynee Arif (2316) Suraya Gul (2319) Faisal Zahoor (2320) FaikaAmin Mir (2318) AmbreenArif (2317)

CONTRACT OF INDEMNITY:
It is a contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself or by the conduct of any other person is called a contract of indemnity. This contract is entered into with object of protecting the promisee against anticipated loss. The contingency upon which the whole contract of indemnity depends is the happening of loss. The person who promises to make good the loss is called the made good is called the indemnified. indemnifier, and the person whose loss is to be

CONTRACT OF GUARANTEE:
It 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; the person in respect of whose default the guarantee is given is called the principal debtor & the person to whom the guarantee is given is called the creditor. DISTINCTION BETWEEN A CONTRACT OF INDEMNITY & A CONTRACT OF GUARANTEE: The following are the points of distinction between the two: NUMBER OF PARTIES: parties -- the indemnifier and the indemnified. In a In a contract of indemnity, there are two

contract of guarantee, there are three parties -- the creditor, the principal debtor and the surety. OBJECT OR PURPOSE: A contract of indemnity is for the repay of loss, whereas a contract of guarantee is for the security of a debt or good conduct of an employee. NUMBER OF CONTRACTS: In indemnity there is only one contract between the indemnifier and the indemnified, while in guarantee, there are three contracts -one between the principal debtor and the creditor, the second between the creditor and the principal debtor. NATURE OF LIABILITY: In the contract of indemnity the liability of the indemnifier is primary in nature. In a the surety, and the third between the surety and

contract of guarantee, the liability of the surety is secondary i.e., the surety is liable only on default of the principal debtor. REQUEST BY THE DEBTOR: In a contract of indemnity it is not

necessary for the indemnifier to act at the request of the indemnified but in a contract of guarantee it is necessary that the surety should give the guarantee at the request of the debtor. EXISTING DEBT OR DUTY: In a contract of indemnity the liability of

the indemnifier arises only on the happening of a contingency but in case of the contract of the guarantee there is usually an existing debt or duty, the performance of which is guaranteed RIGHT TO SUE: In a contract of guarantee, the surety, after he discharges the debt owing to the by the surety.

creditor, can proceed against the principal debtor in his own right. But in case of a contract of indemnity, the indemnifier cant sue the third party for the loss in his own name, because there is no privity of contract. DIFFERENCE IN THE NATURE OF INTEREST: In case of indemnity contract, indemnifier has the interest in earning commission and premium. In case of guarantor he has no any DIFFERENCE IN MEANING :other interest except guarantee. In the contract of indemnity one person promises to save the other from any loss. In the contract of guarantee one person gives guarantee for the performance of the contract. COMPETENCY: All parties in a contract of indemnity must be competent to contract. As a special

case, when a minor is principal debtor, the contract of guarantee is still valid. BAILMENT MEANING AND ITS ESSENTIALS: MEANING OF BAILMENT: The word bailment is derived from the French word ballier which means to deliver. Etymologically, it means any kind of handing over. In legal sense, it involves change of possession of goods from one person to another for some specific purpose. According to section 148 of the contract act -- 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 of according to the directions of the person delivering them. The person delivering the goods is called the bailor, the person to whom they are delivered is called the bailee, and the transaction is called the bailment. For example: (a) A lends a book to B to be returned after the examination. There is a contract of bailment between A and B.Here A is the bailor and B is the bailee. (b) A sells certain goods to B who leaves them in the that of bailor and bailee. (c) Mr. X enters into agreement with Miss. S to deliver her laptop to him on this condition that it shall be returned to her after one month. In this possession of A. The relationship between B and A is

example Mr. X is a Bailee and Miss. S is a Bailor. Laptop is good bailed. It is a contract of Bailment Sometimes there may be bailment even without a contract e.g., when a person finds goods belonging to another, a relationship of bailee and bailor is automatically created between the finder and the owner.

ESSENTIAL FEATURES OF BAILMENT:

DELIVERY OF POSSESSION:
A bailment involves delivery of possession of goods by bailor to bailee or it is a delivery of movable goods by one person to another be either actual or constructive. (a) Actual delivery: when the bailor hands over to the bailee physical possession of the person. The delivery of possession of goods may

goods, it is called actual delivery. E.g. goods stored in a godown can be delivered by handing over the key of the godown. (b) Constructive delivery: It does not involve handing over the physical possession of goods, but something is done which has the effect of putting the goods in the possession of the bailee. E.g. goods in transit i.e., when they are at sea or on a railway, can be delivered by handing over the bill of lading or the railway receipt representing the goods.

FOR SOME PURPOSE: The delivery of goods from bailor to bailee must be for some purpose. When goods are

delivered by mistake without any purpose, there is no bailment within the meaning of its definition. RETURN OF SPECIFIC GOODS: It is agreed between the bailor and the

bailee that as soon the purpose is achieved the goods shall be returned or disposed of according to the directions of the bailor either in their original form or in an altered form. If the goods are not to be specifically returned, there is no bailment. But there is a bailment even if the goods bailed are, in the meantime, altered in form. BAILMENT IS CONCERNED ONLY WITH GOODS: Goods mean every kind of movable property other than money. In a contract of bailment, it is only the possession of goods that passes from the bailor to the bailee and not the ownership of goods. Thus if the property in goods is

transferred for money consideration, it is a sale and not a bailment.

CONTRACT:

It is the basic feature of the bailment. For

the delivery of goods contract between the two parties is made. Contract may be oral or written, implied or expressed. TEMPORARY DELIVERY : The delivery of the goods may not be for the permanent purpose. It is essential that delivery must be made for the temporary purpose. OWNERSHIP: Right of ownership remains with goods to other person. PARTIES TO THE CONTRACT : bailor and it does not change by the delivery of

In the contract of bailment there are two

parties, the bailor and the bailee.

 RETURNABLE: It is very important feature of the bailment. The bailee should return the goods to the bailor or disposed according the directions of the bailor.