2. SYNOPSIS
1) INTRODUCTION TO SPECIFIC CONTRACTS
2) NATURE, SCOPE AND IMPORTANCE OF SPECIFIC CONTRACT
a) Bailment(Sec 148, Sec 149 till Sec 168)
b) Pledge (Sec 172, Sec 173 till Sec 179)
c) Indemnity (Sec 124, Sec 125)
d) Guarantee ( Sec 126, Sec 127 till Sec 144)
e) Agency ( Sec 182 to Sec 189)
3) CONCLUSION
4) BIBLIOGRAPHY
3. 1) INTRODUCTION TO SPECIFIC CONTRACTS
Contracts which have certain specific features are known as specific
contract.
These types of contracts are distinct from other contracts.
The Indian Contract Act, 1872 contains certain specific contracts such as
bailment, pledge, indemnity, guarantee, agency etc.
4. 2) NATURE, SCOPE AND IMPORTANCE OF
SPECIFIC CONTRACT
a) Bailment(Sec 148, Sec 149 till Sec 168)
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". The person to whom they are delivered is called the
"bailee".
Example: Where ‘X’ delivers his car for repair to ‘Y’, ‘X’ is the bailor and ‘Y’
is the bailee.
Example: X delivers a piece of cloth to Y, a tailor, to be stitched into a suit.
It is contract for bailment.
5. SCOPE AND IMPORTANCE OF
BAILMENT
1. Bailment is only for movable goods and not for immovable goods.
2. There should be a purpose for the delivery of goods like safe custody,use
and transportation of the goods, repair etc.
3. If the bailed goods are changed like a raw material is converted into a
product still the contract remains the same as a bailment.
6. b) Pledge (Sec 172, Sec 173 till Sec
179)
“Pledge”, “pawnor” and “pawnee” defined [Section 172]: The bailment of
goods as security for payment of a debt or performance of a promise is
called “pledge”. The bailor is in this case called the “pawnor”. The bailee is
called the “pawnee”.
Example: A lends money to B against the security of jewellery deposited by
B with him i.e. A. This bailment of jewellery is a pledge as security for
lending the money. B is a pawnor and A is a pawnee.
9. c) Indemnity (Sec 124, Sec 125)
Contract of indemnity meaning is a special kind of contract. The term ‘indemnity’ literally
means “security or protection against a loss” or compensation.
According to Section 124 of the Indian Contract Act, 1872 “A contract by which 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, is called a contract of indemnity.”
Example: P contracts to indemnify Q against the consequences of any proceedings which
R may take against Q in respect of a certain sum of money.
10. OBJECTIVITY OF INDEMNITY
The objective of entering into a contract of indemnity is to protect the promisee against unanticipated
losses.
one of the parties is likely to suffer a loss from a commercial transaction
the remedies available with a pure damage claim would not be sufficient to cover the loss suffered
Examples of contracts where indemnities can be used include:
assignment of intellectual property rights: when assigning IP rights to someone, the assignor often gives
the assignee an indemnity against loss they may suffer from defects in those rights
software licensing agreements: when a software developer grants a company the right to use its
software, there is usually an indemnity clause to protect the company against any liability arising from
the use of the software, for example in the event of claims from third parties (eg if the company gets
sued because the software was copied from a third party)
share purchase agreements: when buying shares, the buyer often seeks an indemnity against tax
liabilities of the target company
On the contrary, indemnities should be avoided in certain contracts:
confidentiality agreements: an indemnity for breach of contract in a confidentiality agreement should be
resisted as it will potentially increase the liability of the party who's receiving confidential information,
allowing the disclosing party to recover for all liabilities, costs, claims and expenses incurred in
connection with the breach, as opposed to the loss it actually suffers
consumer contracts: indemnities paid by a consumer to a business are generally deemed unfair and are
prohibited
11. d) Guarantee ( Sec 126, Sec 127 till Sec 144)
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.
As per section 126 of Indian Contract Act, 1872, a contract of guarantee has three parties: –
Surety: A surety is a person giving a guarantee in a contract of guarantee. A person who takes
responsibility to pay a sum of money, perform any duty for another person in case that person
fails to perform such work.
Principal Debtor: A principal debtor is a person for whom the guarantee is given in a contract of
guarantee.
Creditor: The person to whom the guarantee is given is known as the creditor.
For example, Mr. X advances a loan of 25000 to Mr. Y and Mr. Z promise that in case Mr. Y fails
to repay the loan, then he will repay the same. In this case of a contract of guarantee, Mr. X is a
Creditor, Mr. Y is a principal debtor and Mr. Z is a Surety.
12. OBJECTIVITY OF INDEMNITY
It enables a person to get a loan, or goods on credit or employment. Some
person comes forward and ensures the lender or the supplier or the
employer that he may be trusted and in case of any untoward incident, “I
undertake to be responsible”.
In the old case of Birkmyr v Darnell the court said: Where a collateral
guarantee arises when two persons come to shop, one of them to buy, the
other to give credit, thereby promising the seller stating if he doesn’t pay I
will’’. This is a collateral guarantee.
13. INDEMNITY GUARANTEE
1. In indemnity there are two, one
who is indemnified and the other
indemnifier.
1.There are three parties, Principal
debtor, surety and the Creditor.
2.It consists of only one contract
under which indemnifier promises to
pay in the event of certain loss.
2.There are three contracts between
surety, principal debtor and creditor.
3. The contract of indemnity is made
to protect the promise against some
likely loss.
4. The liability of the indemnifier in a
contract of indemnity is a primary
one.
5. The liability arises only on the
happening of a contingency.
6. The indemnifier need not act at the
request of indemnity-holder.
7. The indemnifier cannot sue a third
party in his own name because of
absence of privity of contract between
him and a third party. He can sue the
3. The object of contract of guarantee
is the security of the creditor.
4.In guarantee the liability of surety is
only a secondary, when principal
debtor default.
5.The liability arises only on the
nonperformance
of an existing promise
or non-payment of an existing debt.
6. The surety acts at the request of
the
principal debtor.
7. A surety, on discharging the debt
of principal debtor, can sue 'the
14. e) Agency ( Sec 182 to Sec 189)
According to Section 182 of the Contract Act an 'Agent' is
a person employed to do any act for another or to represent
another in dealings with third persons. The person for
whorn such act is done, or who is so represented, is called
the 'principal'.
Thus, It is clear from the definition, that an agent is a
connecting link between his principal and third parties.
15. OBJECTIVITY OF INDEMNITY
Contracts establishing a relationship of the agency are very common in
business law. These can be express or implied. An agency is created when a
person delegates his authority to another person, that is, appoints them to do
some specific job or a number of them in specified areas of work.
Establishment of a principal-agent relationships confers rights and duties upon
both the parties.
There are various examples of such a relationship: Insurance agency,
advertising agency, travel agency, factors, brokers, del credere agents,
etc. The relationship operates in such a way that the agent is responsible for
compensating his or her principal for loss or damage resulting from his or her
actions and the principal owes his or her agent contractual services.
In addition, the tasks include- the task of following instructions or customs, the
task of not delegating his responsibilities, the task of avoiding conflicts of
interest, the task of keeping accounts, and the task of sound care and skills.
16. 3) CONCLUSION
Different kinds of contracts are used to accomplish different purposes. For eg. Leases are
used to sell the possession of real property for a specified term, while contract for sale of
property are used for the sale and transfer of title to real property.
Insurance contracts are used to sell insurance against loss in exchange for certain payments
at specified intervals
When you order a pizza, you have made a contract with the resturaunt where you have
ordered it.
the list of actual and possible contracts are infinite.
Contracts are the means by which legal persons in our society agree to exchange goods,
services and other valuable things.
The contract law makes such agreements enforceable, which means that an aggrieved party
can seek damages or something even specific performance from the party who allegedly
breached or not performed the contract.
17. 4) BIBLIOGRAPHY
1.THE INDIAN CONTRACT ACT, 1872
2.PARTNERSHIO ACT, 1932
3.SALE OF GOODS ACT, 1930
4.AVATAR SINGH, LAW OF CONTRACTS, 9TH EDITION
5.www.lawdetails.neemsoft.com/specific contracts.
