Special Contracts

Indemnity &
Guarantee

Bailment &
Pledge

Agency

Sec - 124

Sec - 148

Sec - 182

Indemnity & Guarantee

Indemnity

Sec - 124

One person
Makes a Promise
To another person
To save from loss
By doing something
E.G. Insurance Agreement

Parties of indemnity
Indemnifier: Person giving promise
Indemnified: Person receiving promise

Nature of Indemnity
It is a type of contingent contract.
Right of Indemnity holder Sec - 125
Indemnity Holder Is Entitled To Recover :
All damages
All sums paid as compromise to such suit.

Guarantee
Sec - 126
One person
Makes a Promise
To another person
To pay some money
If some other person
Makes default in payment of money
Payable by him
E.G. Surety in loan agreements

Types Of Guarantee
Specific
Guarantee: For a single transaction.
Continuing
Guarantee: For many transactions
It may be for a fixed time
It may be revoked
After revocation it will not apply to future
transactions
It remains applicable for past transactions

Parties
Surety

is person who gives the guarantee [section 126].

Debtor

person for whose default guarantee is given sec

126.
The person to whom guarantee is given sec - 126

Creditor

Rights Of Sureties
Against
Debtor
Subrogation sec 140
Indemnity sec 145.

Against
creditor
Claim security
Setoff

Against
co-sureties
Equal contribution
Sec 146

Discharge of Surety

Revocation -- notice to the creditor Sec -130

Specific guarantee cannot be revoked.
Continuing guarantee -- revoked by death of surety, sec 131
Substituting new contract Sec 62.
Conduct of the creditor
Variation -- without the suretys consent Sec 133.
Creditor makes a composition with debtor Sec 135.
Creditors losses security given to him. Sec 141.
By invalidation of contract of guarantee Sec 142.

Bailment
MEANING: Sec 148
Bailment is
Delivery of goods
By one person to another
For some purpose,
They shall be returned
According to the directions of the person delivering
them

Parties

Person delivering goods is called the bailor

Person to whom they are delivered is called the
bailee. Sec 148

Characteristics Same goods to be returned but form of goods

of bailment
may be changed.
E.g. when cloth is stitched by tailor.

Examples :
Placing an ornament in a bank locker is not bailment.
Deposit of money in a bank is not bailment.