LLB SEM 1

1. SPECIFIC CONTRACTS
UNIT 4
LLB I
BPOC
Sections124 TO 238

2. Contract of Indemnity (Sec 124)
A contract of indemnity is a contract by
which one party promises to save the other from
loss caused to him by the conduct of promisor
himself, or by the conduct of any other person .
A Security against any anticipated loss
It depends on the happening of the loss
It may be express or implied from the circumstances of
case.
considered as general class of contingent contracts.

3.  EX:-
A contracts to indemnify B from consequences of any
proceeding C may take against him in respect of sum of
money 1000Rs.
 Indemnifier (Promisor)??
 Indemnity Holder (Promisee)????

4. Essentials
 Must contain essentials of valid contract.
 Indemnity holder must have suffered a loss

5. Rights
Indemnity Holder
 Damages
 Costs
 All Sums
 Suit for specific
performance
Indemnifier
Analogous to rights
of Surety

6. Contract of Guarantee
A Contract of guarantee is a contract to
perform promise , or discharge the liability of a
third person in case of his default.
 Guarantee may be either oral or written, express
or implied.
 To invoke guarantee contract “Default” is must.
 Also known as contract of Suretyship.
 Something done or promise made for benefit of
principal debtor is considered as CONSIDERATION.

7. Parties ????
(1)Principal debtor (2) creditor (3)Surety
Tripartite Agreement
Every contract of guarantee has three
agreements,
Between Creditor & Principal Debtor
Between Surety & the creditor
Between surety & the principal debtor

8. Essentials
 Existence of debt which must be
recoverable.
 Three parties in a contract of guarantee.
 A promise to pay debt in case of default.
 Consideration
 Liability must be legally enforceable.
 Must have all the essentials of a
 contract.
Bank Guarantee???

9. Distinction
 Two parties
 Liability is primary
 Dependant on
contingency
 Only one contract
 Objective is security
 No right to sue third
party for loss suffered
 Three parties
 Liability is secondary
 Existence of debt
 Three contracts
 Objective is Surety
 Can sue the principal
debtor
Contract of Indemnity Contract of Guarantee

10. Discharge of surety
1. By revocation
2. By variance
3. By death of surety
4. Composition, Extension and promise not to sue
5. Discharge of principal debtor
6. By imparting surety’s remedy
7. By loss of security
8. By novation
9. By misrepresentation
10. On failure of consideration

11. Exceptions
 Surety is not discharged for transaction prior to notice or
death
 Entry of creditor with the third party to not to sue the
debtor.
Invalid Guarantees
1.Guarantee by misrepresentation
2.Guarantee by Concealment
3.Guarantee that co surety shall join
4.Essential elements are absent

12. Rights of surety
 Right of subrogation
 Right to benefit of creditor’s securities
 Right to indemnity
 Right of equality in case of Co sureties.

13. Bailment & Pledge
Bailment (sec 148)
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 off according to the directions of the person
delivering them.
Ex- A delivers his radio to B for repairs.
 Bailor
 Bailee
 Custody of goods without possession can not be called as
bailment. Ex- A servant

14. Essentials
 Contract
 Delivery of goods and change of possession
 For specific purpose
 Movable goods
 Return of specific goods
Kinds of Bailment
• Gratuitous bailment
•Bailment for reward and remuneration
•Pledge

15. Bailee
 To take reasonable care of
the goods
 Not to make unauthorized
use of goods
 Not to mix the goods bailed
with his own goods
 Return the goods bailed
 Not to create adverse title
 To return the goods with
accretion
 Right to lien
 Right against third party
 Right to recover
damages from detect of
goods
 Right to claim for extra
ordinary expenses
Duties Rights

16. Bailor
 To disclose all the known
defects
 To bear the extra
ordinary expenses of
bailment
 To receive back the
goods
 Bailor’s responsibility to
bailee
 Avoidance of contract
 Return of goods
 Compensation from a
wrong does
 Enforcement of rights
Duties Rights

17. Lien
A lien is a right of any person to retain that which
is in his possession belonging to another until certain demands
of a person in possession are satisfied.
Does not include right to sale.
Possession is essential to create a right of lien.
 Lien may arise by
1.Statute 2. Express or implied 3. in ordinary course of dealings
 Types of Lien
1. General Lien
2. Particular or Specific Lien

18. Pledge
The bailment of goods as security for payment
of a debt or performance of a promise is called
“Pledge". The bailor in this case is called the pawner
pledger. The bailee is called the “Pawnee”or pledgee.
Ex:- Bailment of jewellary is pledge.
Pledge is a kind of bailment.
Rules of bailment are applicable to pledge.

19. Essentials
 The goods must be delivered as security for payment of
debt
 There must be actual or constructive delivery.
 Only movable goods can be pledge.
 Transfer of possession is essential.
Difference
Lien is a personal right of retention and does not have right to
sale.
In pledge Sale on default is incident.

20. Rights
Rights of Pawnee
1. To retain performance of promise, interest on debt
2. To recover extra ordinary expenses
3. Right on pawnor’s default
Rights of Pawnor
1. Right of redemption
2. Preservation and maintenance
3. To receive back the goods

21. Pledge by non owner
 Pledge by mercantile agent
 Pledge by a person in possession of goods
under voidable contract
 Pledge by a person with limited interest.
 Pledge by co owner in sole possession
 Pledge by seller or buyer in possession after
sale.

22. Law of Agency
 Agent
is a person employed to do an act for another or to
represent another person while dealing with the third party.
 Principal
The person for whom such act is done for whom
he is representing is called principal.
Who can be Agent & Principal???????????
Consideration is not required to appoint an agent.
Capacity to employ / to be employed as Agent.

23. How Agency is constituted?
 Agency by Agreement (Express / Implied)
 Agent by necessity
Where one is compelled to act an agent
without authority of other
 Agency by estoppels or by holding out
No real authority it is created by estoppel
 Agency by operation of law
Partnership is implied agency
 Agency by ratification
 Accepting a past act of an agent

24. Rules governing Ratification
 Act must be done by person on behalf of another.
 Act done without authority
 Act done must have legal existence.
 Ratification can be expressive or implied.
 The act to be ratified must not be void ab initio.
 Principal must be competent to ratify.
 Ratification must be done within a reasonable time
 It must be communicated.
 It can be for whole contract
 It should not put third party to damages.

25. Classification of Agents
 Specific orParticularAgent
 General Agent
 Mercantile Agent
1. Broker
2. Commission Agent
3. Factor
4. Auctioneer
5. Del Creder Agent
 Sub Agent
 Co Agent
 Substitute Agent

26. Termination of Agency
 By Act of Parties
1. By Agreement
2. By Revocation
3. By renouncing
4. By performance
 By Operation of Law
1. By Death or insanity
2. By insolvency of the principal

27. Duties & Liabilities of Agent
 To conduct principal’s business
 Conduct business with skill & diligence
 To render proper accounts
 To pay sums received for principal
 To communicate with principal
 On principal’s death or insanity
 Not to deal in his own account
 Use of information
 Secret profits
 Adverse title

28. Duties & Liabilities of Agent
(contd)
 Not to delegate
 Liable for acts of sub agents
 For misrepresentation or fraud
 To damages
 For misconduct

29. Rights of Agent
 Right of retainer
 Right to claim remuneration
 Right of Lien
 Right to indemnity
 Compensation
 To do lawful things
 In emergency
 To appoint Substitute Agent
 To renounce agency
 Compensation for premature revocation

30. Duties & Liabilities of Principal
 To indemnify agent
 Compensate agent for injury caused
 To pay remuneration and dues
 Misrepresentation or fraud by agent
 On contracts entered by agent with third
person
 On notice given to agent
 Where principal induces third persons to
believe that agents unauthorized acts were
authorized

31. Rights of principal
 To repudiate contract
 To claim benefit
 To ratify or disown agent’s acts
 To revoke agent’s authority
 To claim loss or profit

32. Agent when personally liable?
 Where the principal is a foreigner
 Where Principal is undisclosed
 Where principal is disclosed though cannot
sue
 Agent makes himself Expressly liable
 Agency coupled with interest
 Personal Liability of an agent by custom
 Where an Agent acts beyond his authority
 Pretending Agent

33. References
 http://www.slideshare.net/tabrezahmad/specifi
c-contracts
 http://www.slideshare.net/vikramsankhala/cont
ract-ppt

34. Thank You