A

Presentation
On
Indemnity & Guarantee
Bailment & Pledge

Submitted to :

Shakti Dodiya

Submitted by :

Ravi Barot (02)

SPECIAL CONTRACTS
CONTRACT

OF INDEMNITY
{SEC. 124 & 125 }
CONTRCAT OF GUARANTEE
{SEC. 126 TO 147 }
CONTRACT OF BAILMENT
{SEC. 148 TO 181 }
CONTRACT OF PLEDGE

CONTRACT OF
INDEMNITY

Meaning and Definition of Indemnity

Section 124 defines a contract of indemnity as A
contract of indemnity is a contract whereby 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.
Definition of Indemnity under Section 124 is
restrictive.

FEATURES OF INDEMNITY

It must possess all ingredients of a valid agreement.

It is a contingent agreement to make good the loss.
The loss must be caused by human conduct only.
Loss must have actually been suffered.

PARTIES TO CONTRACT OF INDEMNITY

INDEMNIFIER:
INDEMNITY HOLDER:

Examples:
Motor insurance
Marine insurance
Fire insurance
Life insurance is not the contract of indemnity

RIGHTS OF INDEMNITY-HOLDER
WHEN SUED

All Damages
All Costs
All Sums

RIGHTS OF INDEMNIFIER
The contract act is silent about the rights of
indemnifier.

CONTRACT OF GUARANTEE
Meaning

and Definition

A contract of guarantee is defined by the Indian

Contract Act, as A contract to perform the
promise or discharge the liability of a third
person in case of his default. A guarantee may
be either oral or written. [section 126].

ESSENTIALS OF CONTRACT OF GUARANTEE:

Existence of a principal debt.
Consideration for a contract of guarantee.
There should be no misrepresentation or concealment.
Contract of guarantee must contain all the essential elements of
valid contract.
Contract of guarantee is a complete and separate contract by
itself.

PARTIES TO CONTRACT OF GUARANTEE

SURETY:
PRINCIPAL DEBTOR:
CREDITOR:

TYPES OF GUARANTEE

SPECIAL GUARANTEE

A guarantee is a specific guarantee, if it is

intended to be applicable to a particular debt and thus
comes to an end on its repayment.

CONTINUING GUARANTEE

A guarantee which extends to a series of

transactions is called a continuing guarantee,
e.g., (i) fidelity guarantee, (ii) overdraft.

RIGHTS OF SURETY
AGAINST THE PRINCIPAL DEBTOR
Right of subrogation
Right to indemnity
AGAINST THE CREDITOR
Right Of Securities
Right To Claim Set Off
AGAINST THE CO-SURETIES
When several co-sureties have given guarantee for the same debt
with their maximum limits, they are liable to pay equally but subject to
the limits they have fixed

DISCHARGE OF SURETY
Revocation by notice.
Revocation by death.
Discharge of surety by variance in terms of contract.
Discharge of surety by release or discharge of principal debtor.
Discharge of surety when creditor compounds with, gives time
to, or agrees not to sue, principal debtor.
Creditor's forbearance to sue does not discharge surety.
Release of one co-surety does not discharge other.
Discharge of surety by creditor's act or omission impairing
surety's eventual remedy.
By the creditor losing his security.

CONTRACT OF BAILMENT

What is Bailment?

Section 148 defines Bailment as:

The delivery of goods by one to another
person 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,
and the person to whom goods are delivered
is called the Bailee

ESSENTIALS AND LEGAL RULES AS

TO BAILMENT:

Contract:
Delivery of Goods:
No Transfer of Ownership:
Delivery of Goods for Some Purpose:
Return of Specific Goods:
Movable Goods:
Deposit of Money Into Bank:

KINDS OF BAILMENT

On the basis of benefit

Bailment exclusive for Bailors benefit.

Bailment exclusive for Bailees benefit
Bailment for mutual benefit.

On the basis of willingness

Voluntary Bailment
Involuntary bailment

On the basis of Rewards

Gratituous Bailment
Non-Gratituous Bailment

Rights Of Bailor
Right of indemnity for losses due to negligence by bailee[S.152]
Termination of bailment on inconsistent use by the bailee[S.153]
Compensation for unauthorised use by the bailee[S.154]
Compensation when the bailee mixes the goods bailed with own
goods [S.155]
Right of return of goods back[S.160]
Right to profit from goods bailed[S.163]

Duties Of Bailor
To Disclose faults in goods bailed [S.150]
To repay the necessary expenses [S.158]
To indemnify the bailee [S.164]
Liability on premature breach of bailment[S.159]

Rights Of Bailee
Right to compensation for loss on account of fault in goods
bailed[S.150]
Right to receive necessary expenses[S.158]
Right against premature termination of bailment[S.159]
Right to compensation in case of defective title[S.164]
Delivery of goods to one of the joint owners[S.165]
Right against third parties

Duties Of Bailee
Take reasonable care of goods[S.151]
Not to make unauthorized use of goods[S.154]
Not to mix goods with his own goods[S.155-157]
Duty to return goods[S.160&161]
Not doing any act inconistent with terms of bailment[S.153]
Returning any profit [S.163]

CONTRACT OF PLEDGE OF PAWN

Section 172
Pledge is the bailment of goods as security

for payment of debt or performance of a

promise. Bailment of goods as a security
for payment of debts or performance of
promise is called pledge. The bailor is
called pledgor or pawnor and the bailee is
called Pawnee.

ESSENTIALS OF PLEDGE:
Delivery of Goods:
Delivery of goods should be by way of security..
Goods must be movable.

RIGHTS AND DUTIES OF PAWNEE

Right of retainer {S.173}:
Right of particular lien
Right to extraordinary expenses {S.175}
Right in case of default of the pawnor
RIGHTS AND DUTIES OF PAWNOR
Right of redemption
Right to take back the goods.

PLEDGE BY NON OWNERS

Pledge by mercantile agent

Pledge by person in possession under
voidable contract
Pledge where pawnor has only a limited
interest
Pledge by co-owner in possession
Pledge by seller or buyer in possession
after sale
.