Contract of guarantee

&
contract of bailment

Submitted By : Shruti jain BBA (speciallization) Submitted To : Dr. Meenakshi Upman

Enrollment no- 2122273773
 Contract of guarantee (section 126 -147)

• Contract of Guarantee means a contract to perform the promises made or discharge the liabilities of the third person in
case of his failure to discharge such liabilities.

• It must have all the essentials of a valid contract such as offer and acceptance, intention to create a legal relationship, capacity to
contract, genuine and free consent, lawful object, lawful consideration, certainty and possibility of performance and legal
formalities
 Distinction between indemnity & guarantee

• The key differences between guarantees and indemnities include: a guarantee is a secondary liability, which means that
there will be another person who is primarily liable for the obligation; whereas, an indemnity imposes a primary liability.

• A guarantor's liability is limited by the extent of the debtor's liability.

 KINDS OF GUARANTEE

There are two types of Guarantee

• specific Guarantee which is for a specific transaction.

• Continuing Guarantee which is for a series of transactions.
 NATURE AND EXTENT OF SURETY’S LIABILITY

As laid down in Section 128 of the Indian Contract Act, 1872, the liability of the surety is coextensive. It has the
same extent as that of the principal debtor. It emphasizes the maximum degree as well as the scope of the
surety's liability.
 RIGHT OF SURETY

When the principal debtor makes a default in the performance of his duty, and on such a default, the surety
makes the necessary payment or makes performance of all what he is liable for he becomes invested with all the
creditor had against the principal debtor. ... This is known as surety's right of subrogation.
DISCHARGE OF SURETY

A surety is discharged from his liability on: ... If the creditor releases the principal debtor, the surety also
automatically discharges. When the creditor makes an arrangement for composition or promises to give time or
not sue the principal debtor without surety's consent, the surety will be discharged
Contract of bailment (section 148 -171)
 DEFINATION AND ESSENTIALS

• 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".

• Three elements are generally necessary for the existence of a bailment: delivery, acceptance, and
consideration. Actual possession of or control over property must be delivered to a bailee in order
to create a bailment. ... Consideration, the exchange of something of value, must be present for a
bailment to exist.
 KIND OF BAILMENT

There are three types of bailments:

(1) for the benefit of the bailor and bailee;
(2) for the sole benefit of the bailor; and
(3) for the sole benefit of the bailee.
A bailment for the mutual benefit of the parties is created when there is an exchange of
performances between the parties.
RIGHTS AND DUTIES OF BAILOR AND BAILEE

• It is the duty of a bailor to disclose all faults. If bailor fails to disclose such faults then he will be responsible
for the damage caused to goods or loss suffered by the bailee.
• Also, the bailor is under the duty to pay the extraordinary expenses incurred by the bailee for such bailment.
 LIEN AND ITS
TYPES
The Indian Contract Act, 1872 classifies the Right of Lien into two types:

• Particular Lien and General Lien.

• Section 170 of the aforesaid Act gives the exact definition of Particular Lien
which states that the Bailee is free to hold control of a precise property with
position to the charge which is due.
• thanku