Indemnity



It is a special type of contract as in special contracts some specific provisions are also applicable along with the provisions of general contract. Indemnity means to make good the loss or to compensate the party who has suffered some loss. A contract by which one party promises to save the other by the losses caused by his conduct or by any other party is referred as 'Contract of Indemnity'.  

Characteristics of Indemnity 

The person who promises to make good the loss is called the 'Indemnifier' and the person whose loss is to be made good is called 'Indemnity-holder' Based on English Law, Contract of Indemnity also covers contract of Insurance also in India. A contract of Indemnity may be expressed or implied  

Contract of Guarantee 

It is a contract to perform a promise or discharge the liability of a third person in case of his default. Three parties are involved in a contract of guarantee-- 

1. Principal Debtor: the person for whose default guarantee is given 2. Creditor: person to whom the guarantee is given 3. Surety: person who gives the guarantee

Essentials of a Valid Guarantee 

Tripartite Agreement Consent of three parties Existence of a liability Essentials of a valid contract Guarantee not to be obtained by misrepresentation Guarantee not to be obtained by concealment of material facts.     

Types of Guarantee 

Specific Guarantee Continuing Guarantee 

Extent of Surety's Liability
In the absence of a contract to contrary, the liability of a surety co-extensive with that of the principal debtor unless otherwise agreed. However 

It may be made less by an express contract His liability arises as soon as principal debtor defaults. Surety may sue the guarantor without suing the principal debtor. If there is a condition precedent for surety's liability, the surety would be liable only when the such condition is fulfilled.  

Topics of Presentation
‡ ‡ Rights of Surety Discharge of Surety

Bailment 

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. The person delivering the goods is 'Bailor' The person to whom the goods are delivered are is called 'Bailee' Only Special Property of goods passes to the Bailee not the general property   

Essential Elements of Bailment 

Agreement: expressed or implied Delivery of Goods: Voluntary and Actual or Constructive Purpose Return of Specific Goods: may be in different form   

Types of Bailment
1. On the basis of reward: 

Gratuitous Bailment Non-Gratuitous Bailment For exclusive benefit of bailor For exclusive benefit of bailee For mutual benefit of bailor and bailee 

2. On the basis of Benefit:   

Termination of Bailment 

On expiry of fixed period On fulfillment of purpose Inconsistent use of goods Destruction of subject matter of Bailment   

Presentation Topics
‡ ‡ ‡ ‡ Duties of Bailor Duties of Bailee Rights of Bailor Rights of Bailee

Contract of Agency 

In a contract of agency, a person employs another person to do any act for him or to represent him in dealing with third persons so as to bind himself by the acts of such another person. An agent is the a person employed to do any act for another in dealing with third party. An agent establishes a contract between such another person and third party. The person for whom the act is done by an agent is called the Principal.  

Agent-Principal Relationship 

Any person whether he has contractual capacity or not can be an agent. But the agent who is a minor is not responsible to his Principal. Any person who is of the age of majority and of sound mind may employ an agent. Thus a minor cannot appoint an agent but the guardian of the minor can appoint the agent for him. No consideration is required for agency If the agent can bind the principal for his acts with third parties is the test of agency relationship.   

Creation of Agency 

By Express Authority By Implied Authority By Ratification By Operation of Law   

Classification of Agent 

General Agent Special Agent Mercantile Agent: Broker, Auctioneer, Sales agent, Del-Credere Agent, Banker Non-Mercantile Agent: Attorney, Wife, Insurance agent, Election agent and Solicitors   

Delegation of Authority by Agent
In general delgation of authority by agent is not allowed but as per the exceptions of section 190 in some case it is allowed. The delgation may in two forms: 

Sub-Agent: appointed under the agent and accountable to the agent Substituted Agent: named by the agent but accountable to Principal 

Termination of Agency
1. By the act of Parties: 

By mutual agreement By revocation of authority by the principal By renunciation of agency by the agent On completion of business On death/unsound mind of principal or agent On insolvency of principal On expiry of fixed period On destruction of subject matter  

2. By operation of Law     

Topics of Presentation
‡ ‡ ‡ Rights of an Agent Duties of an Agent Personal Liability of Agent

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