This document defines and explains key concepts regarding four types of contracts: 1. Contract of indemnity - Where one party promises to save the other from loss caused by the promisor or another. 2. Contract of guarantee - Where one party promises to perform if a third party defaults. Sureties are liable for the principal debtor's obligations unless otherwise stated. 3. Contract of bailment - The delivery of goods by one person to another for some purpose, to be returned or disposed of according to the bailor's directions. 4. Contract of agency - Where one person acts for another, called the principal. Agents have duties to their principal and rights like remuneration. Agency can be terminated

2. 1. CONTRACT OF INDEMNITY
2. CONTRACT OF GUARANTEE
3. CONTRACT OF BAILMENT
4. CONTRACT OF AGENCY

3. 
DEFINITION
S.124 – 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.

4. 
1)
2)

1)
2)
3)
PARTIES TO CONTRACT
Indemnifier
Indemnified / Indemnity Holder
RIGHT OF INDEMNITY HOLDER
WHEN SUED (S.125)
All Damages
All Costs
All Sums

5. 
FEATURES OF INDEMNITY
1)
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.
2)
3)
4)

6. DEFINITION
S.126 – “A contract to perform the
promise or discharge the liability of
a third person in case of his
default.

7. STATUTE
S.128 of The Indian Contract Act,
1872 states that “the liability of the
surety is co-extensive with that of
the principal debtor, unless it is
otherwise provided by the contract.

8. PARTIES TO CONTRACT
 SURETY – The person who gives
the guarantee.
 PRINCIPAL DEBTOR – The person
for whom the guarantee is given.
 CREDITOR – The person to whom
the guarantee is given.

9. KINDS OF GUARANTEE
 SPECIFIC – It is intended to be
applicable to a particular debt and
thus comes to an end on its
repayment. It is irrevocable
 CONTINUING – It extends to a
series of transactions. It is
revocable regarding future
transactions.

10. RIGHTS OF A CREDITOR
 Payment from surety as soon as
the principal debtor refuses to pay
or makes default in payment.
 Where surety is insolvent, creditor
is entitled to proceed in the surety’s
insolvency & claim the pro-rata
dividend.

11. RIGHTS OF SURETY
 AGAINST CREDITOR – In case of fidelity
guarantee, surety can direct creditor to dismiss
the employee whose honesty he has guaranteed
and employee has been proved dishonest.
 AGAINST CO-SURETIES – When a debt is
guaranteed by more than one person they are
called co-sureties. They have a right of
contribution’ between them.
When a surety has paid more than his share, he
has a right of contribution from the other
sureties who are equally bound to pay with him.
If one of the sureties
become insolvent, the solvent co-sureties have
to contribute the amount equally.

12. AGAINST PRINCIPAL
DEBTOR –
•RIGHT OF SUBROGATION: Surety
is subrogated to all the rights
which the creditor had against the
principal debtor.
•RIGHT TO BE INDEMNIFIED: Surety
has a right to recover from the
principal debtor, the amounts which
he has rightfully paid under the
contract of Guarantee.

13. DISCHARGE OF SURETY
The liability of a surety under a contract of
guarantee may at any time be revoked by the
surety, as to the future transactions by notice to
the creditor:
By death of surety
By variance in terms of contract
By release or discharge of principal debtor
By compounding with, or giving time to, or
agreeing not to sue principal debtor
By creditors act or omission impairing surety’s
eventual remedy.
Loss of security

14. DEFINITION – S.148
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 be
disposed off according to the directions of
the person delivering them.

15. PARTIES TO THE CONTRACT
Bailor
Bailee
FEATURES
Delivery of goods
Contract
Return of goods in specie

16. KINDS OF BAILMENT
Safe Deposit – Depositum
Lending – Commodation
Hire – Locatio et Conductio
Pledge or Pawn – Vadium
Reward – Mondatum

17. RIGHTS / DUTIES OF BAILOR
Disclosure of faults
Repayment of necessary expenses
Responsibility for loss
RIGHTS / DUTIES OF BAILEE
To take care of goods
Not to make unauthorised use of goods
Not to mix goods bailed
To return goods bailed
To return excess profits
Not to set up an adverse title

18. TERMINATION OF BAILMENT
On expiry of the stipulated
period.
On the accomplishment of the
specified purpose.
By bailee’s act inconsistent with
conditions.
Termination of gratuitous
bailment.

19. DEFINITION – S.182
An agent is a person employed to do an
act for another or to represent another in
his dealings with third person. The
person for whom such act is done or who
is so represented is called the principal.

20.  General Agent
 Special Agent
 Co-Agent
 Broker
 Auctioneer
 Commission Agent
 Del-credre Agent

21. DUTIES OF AN AGENT
 Follow instructions of principal
 Conduct business with care & skill
 Remit Sums
 Not to make secret profit
 Communication with principal in emergency
 Avoid conflict of interest
 Duty not to delegate

22.  Right To Remuneration
 Right Of Lien
 Right Of Retainer
 Right To Be Indemnified
 Right To Be Compensated

23. Express Agreement
Implied Agreement
By Necessity
By Estoppel
By Holding Out
By Ratification

24. ACT OF THE PARTIES
 Principal Revoking Agent’s Authority
 Agent Renouncing Business of Agency
OPERATION OF LAW
 Completion Of Business of Agency
 By Efflux of Time
 Destruction of Subject Matter
 Death Or Insanity Of Agent Or Principal
 Insolvency of Principal

25. CONDITIONS UNDER WHICH AGENCY
CANNOT BE TERMINATED
 Agency Coupled With Interest – S.202
 Authority Partially Exercised – S.203
 Express Contract – S.205

26. THE
END !!!