This document discusses contracts of indemnity, guarantee, and bailment under Indian contract law. It defines these terms and outlines their key features. For contracts of indemnity, it notes they involve one party promising to save another from loss caused by a third party. Guarantee contracts involve promising to perform or discharge the liability of a third party in case of their default. The document discusses the parties, rights, and discharge in these contracts. It also outlines the definition of bailment as delivery of goods for a purpose upon agreement they will be returned, and notes the rights and duties of bailors and bailees.

1. GURUKUL KANGRI
VISHWAVIDYALAYA,HARIDWAR
• Mr. Divyandu Pandey

3. CONTRACT OF INDEMNITY
Section 124 defines a contract of indemnity as
“A contract of indemnity is a contract whereby
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.
Definition of Indemnity under Section 124 is
restrictive.

4. ILLUSTRATION
• A contracts to indemnify B against the
consequences of any proceedings which C
may take against B in respect of a certain
sum of 200 rupees. This is a contract of
indemnity.

5. FEATURES OF INDEMNITY
 It must possess all ingredients of a valid
agreement.
It is a contingent agreement to make good
the loss.
The loss must be caused by human conduct
only.
Loss must have actually been suffered.

6. PARTIES TO CONTRACT OF
INDEMNITY
• INDEMNIFIER:
• INDEMNITY HOLDER
Examples: Motor insurance
Marine insurance
Fire insurance
• Life insurance is not the contract of
indemnity

7. RIGHTS OF INDEMNITY
HOLDER WHEN SUED
• All Damages
• All Costs
• All Sums

8. RIGHTS OF INDEMNIFIER
• The contract act is silent about the rights of
indemnifier.

9. Contract of Guarantee
• Meaning and Definition
A contract of guarantee is defined by the
Indian Contract Act, as “A contract to
perform the promise or discharge the
liability of a third person in case of his
default.” A guarantee may be either oral or
written. [section 126].

10. ILLUSTRATIONS
• (a) B requests A to sell and deliver to him goods on
credit. A agrees to do so, provided C will guarantee
the payment of the price of the goods. C promises to
guarantee the payment in consideration of A’s
promise to deliver the goods. This is a sufficient
consideration for Cs promise.
• (b) A sells and delivers goods to B. C afterwards
requests A to forbear to sue B for the debt for a year,
and promises that, if he does so, C will pay for them
in default of payment by B. A agrees to forbear as
requested.
• This is a sufficient consideration for Cs promise.

11. ESSENTIALS OF
CONTRACT OF
GUARANTEE:
• Existence of a principal debt.
• Consideration for a contract of guarantee.
• There should be no misrepresentation or
concealment.
• Contract of guarantee must contain all the
essential elements of valid contract.
• Contract of guarantee is a complete and
separate contract by itself.

12. PARTIES TO CONTRACT OF
GUARANTEE
• SURETY:
• PRINCIPAL DEBTOR:
• CREDITOR:

13. TYPES OF GUARANTEE
• SPECIAL GUARANTEE
A guarantee is a “specific guarantee”, if it
is intended to be applicable to a particular
debt and thus comes to an end on its
repayment.
CONTINUING GUARANTEE
A guarantee which extends to a series of
transactions is called a “continuing
guarantee”, e.g., (i) fidelity guarantee, (ii)
overdraft.

14. RIGHTS OF SURETY
• AGAINST THE PRINCIPAL DEBTOR
Right of subrogation
Right to indemnity
AGAINST THE CREDITOR
Right Of Securities
Right To Claim Set Off
AGAINST THE CO-SURETIES
When several co-sureties have given guarantee
for the same debt with their maximum limits,
they are liable to pay equally but subject to the
limits they have fixed

15. DISCHARGE OF SURETY
• Revocation by notice.
• Revocation by death.
• Discharge of surety by variance in terms of contract.
• Discharge of surety by release or discharge of principal debtor.
• Discharge of surety when creditor compounds with, gives time to, or
agrees not to sue, principal debtor.
• Creditor's forbearance to sue does not discharge surety.
• Release of one co-surety does not discharge other.
• Discharge of surety by creditor's act or omission impairing surety's
eventual remedy.
• By the creditor losing his security.
• By concealment or misrepresentation.

16. CONTRACT OF CONTRACT
OF BAILMENT
• What is Bailment?
Section 148 defines Bailment as: “The
delivery of goods by one to another person
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’, and the person to whom
goods are delivered is called the ‘Bailee

17. ESSENTIALS AND LEGAL
RULES AS TO BAILMENT:
• Contract:
• Delivery of Goods:
• No Transfer of Ownership:
• Delivery of Goods for Some Purpose:
• Return of Specific Goods:
• Movable Goods:
• Deposit of Money Into Bank:

18. Kinds OF Bailment
• On the basis of benefit
.Bailment exclusive for Bailor’s benefit.
.Bailment exclusive for Bailee’s benefit
.Bailment for mutual benefit.
• On the basis of willingness
.Voluntary Bailment
.Involuntary bailment
• On the basis of Rewards
. Gratituous Bailment
. Non-Gratituous Bailment

19. Rights Of Bailor
• Right of indemnity for losses due to
negligence by bailee[S.152]
• Termination of bailment on inconsistent
use by the bailee[S.153]
• Compensation for unauthorised use by the
bailee[S.154]
• Compensation when the bailee mixes the
goods bailed with own goods [S.155]
• Right of return of goods back[S.160]
• Right to profit from goods bailed[S.163]

20. Duties Of Bailor
• To Disclose faults in goods bailed [S.150]
• To repay the necessary expenses [S.158]
• To indemnify the bailee [S.164]
• Liability on premature breach of
bailment[S.159]

21. Rights Of Bailee
• Right to compensation for loss on account
of fault in goods bailed[S.150]
• Right to receive necessary expenses[S.158]
• Right against premature termination of
bailment[S.159]
• Right to compensation in case of defective
title[S.164]
• Delivery of goods to one of the joint
owners[S.165]
• Right against third parties

22. Duties Of Bailee
• Take reasonable care of goods[S.151]
• Not to make unauthorized use of
goods[S.154]
• Not to mix goods with his own
goods[S.155-157]
• Duty to return goods[S.160&161]
• Not doing any act inconistent with terms of
bailment[S.153]
• Returning any profit [S.163]

23. Pledge
• A pledge is only a special kind of bailment, and chief
basis of distinction is the object of the contract. Where
the object of the delivery of goods is to provide a security
for a loan or for the fulfilment of an obligation, that kind
of bailment is pledge. Under Indian Contract Act, 1872
the ‘Pledge’ has been defined in section 172 as:
• S 172. “Pledge”, “pawnor”, and “Pawnee” defined:
• 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”.

24. • THANKYOU