.

.CONTRACT OF INDEMNITY AND GUARANTEE

:INDEMNITY
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 or event.
The person who promises to make good the loss is called
the Indemnifier and the person to whom such promise
.is given is called the Indemnified

:GUARANTEE
A contract to perform the promise, or discharge
the liability, of a third person in case of his
default. The person who gives the guarantee is
called the Surety, the person for whom the
guarantee is given is called the Principal debtor
and the person to whom the guarantee is given is
.called the Creditor

RIGHTS OF INDEMNITY HOLDER

The promisee in a contract of indemnity, acting within the scope
: -of his authority, is entitled to recover from the promisor
All damages which he may be compelled to pay in any suit . 1
.respecting to matter of indemnity
All costs which he may be compelled to pay in any such suit if in . 2
bringing or defending it he did not contravene the orders of
. the
promisor and acted prudently
All sums which he may have paid under the terms of any . 3
compromise
of any such suit, if the compromise was not in
contravention of orders
by the promisor and was prudent to
. make for the indemnified

DISTINCTION B/W CONTRACTS OF

.INDEMNITY & GUARANTEE

.Number of parties and contracts. 1

.Nature of liability. 2
Nature of transaction.(Nature of Obligation). 3
.Subrogation. 4

RIGHTS OF SURETY

:Against the principal debtor

.Right of Subrogation. 1
.Right to claim Indemnity. 2
.Right to sue before payment. 3
:Against the creditor
Benefit of every security. 1
.Claim of set of. 2
Claim of suit by the creditor. 3
TYPES OF GUARANTEE AND REVOCATION
.Continuous and specific guarantee

.DISCHARGE OF SURETY

.By revocation of contract of Guarantee .1

.By death of surety .2
.By novation. 3
.By variance in terms of contract. 4
.By release or discharge of principal debtor. 5
By arrangement made by creditor with PD without. 6
.suretys
consent
By an act of creditor inconsistent with the rights. 7
.of surety
.By loss of security. 8

BAILMENT

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 direction 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

CHARACTERSTICS OF BAILMENT

.a. Delivery of goods

.b. Delivery of possession temporary but for some purpose
c. Goods to be managed or disposed of in accordance with
. directions of the bailorthe
.d. Moveable properties

Kinds of Bailment

Gratuitous: 1

Bailment for reward: 2

DUTIES OF BAILEE

.The duty to take care of the goods entrusted to him . 1

.Not to make unauthorized use of the goods . 2

.Not to mix the goods with his own goods . 3

.Not to set up a title to the goods adverse to the title of the bailor . 4

.To return the goods after the purpose or the period of bailmet is over . 5

.To return any accretion to the goods . 6`

DUTIES OF BAILOR

.To disclose defects in the goods bailed. 1

.To bear extraordinary expenses. 2
To compensate or indemnify the bailee for any loss which the bailee may sufer by . 3
.reason
that the bailor was not entitled to make the bailment
.To repay usual expenses. 4

RIGHTS OF BAILEE

.Right to receive compensation for loss incurred for bailor s defective title . 1
Right to indemnify for the loss in excess of benefits enjoyed for the goods returned . 2
.before
agreed time in case of gratuitous bailment
.Right to recover extraordinary expenses incurred on the goods .3
.Right to recover usual expenses in case of gratuitous bailment . 4
Right to recover compensation for the loss sufered from the non-disclosure of the in . 5
the
. goods

RIGHTS OF BAILOR

Right to claim damages for the loss caused to the goods for the . 1
.bailee
not taking reasonable care
Right to terminate bailment and to recover damages for the loss
.
caused by unauthorized use of the goods

.2

Right to claim compensation for unauthorized mixing of the . 3

.goods
.Right to claim any increase or profit to the goods . 4
.Right to demand return of the goods . 5
.At any time in case of a gratuitous bailment . 6
At the time when the purpose of the bailment is accomplished in . 7
.other cases

TERMINATION OF BAILMENT
Where the beilee does any act inconsistent with . 1
.the condition of
bailment
When the bailment period expires or the object of. 2
.the bailment
has been achieved
A gratuitous bailment can be terminated by bailor. 3
.at any time
A gratuitous bailment is terminated by death of. 4
.either bailor
or bailee

PLEDGE

The bailment of goods as security for payment of a debt or for the

performance of a promise. The bailor in this case is called the PAWNOR
.and the Bailee is called the PAWNEE

.BAILMENT AND PLEDGE

Pledge is nothing but bailment of goods as a security for the payment of . 1

.a
debt
Like bailment only possession is transferred to the Pawnee but not the
.2
.
ownership
.Delivery of goods may be constructive or actual . 3
.Only moveable goods can be pledged . 4
Like bailee, The pledgee should not make unauthorized use of the goods . 5
.
pledged to him
In case of Bailment the bailee has no right in respect of the things bailed; . 6
In
case of Pledge, the Pawner gives Pawnee certain rights over the
. things pledged
and to retain the same until the promise is fulfilled
The pledgee if not paid in time can sell the goods pledged after giving . 7
. notice
to the pledger of the same

RIGHTS OF PAWNEE
The Pawnee has a right of retainer for the payment of not . 1
only
the debt, but also the interest and cost incurred by
him in respect
of the possession or for the preservation of
.the thing pledged
The Pawnee is entitled to recover from the Pawner. 2
extraordinary
expenses incurred by him for the
preservation of the goods pledged but can not retain the
.goods
for the payment of the same
He may retain the goods as collateral security pending his . 3
own
suit for recovery of the debt. He may sell the goods
.pledged on
giving the pawner reasonable notice
Even if the Pawnors title is defective under a voidable . 4
contract,
the Pawnee's title is not afected by it provided
.he had no notice
of the defect
The Pawnee can, when the pawner commits defaults in . 5
paying the
debt at the stipulated time sell the goods
pledged, without going
to court, on giving the pawner
.reasonable notice

RIGHTS OF PAWNOR

:Right to redeem
In case of default of the pawner to repay on the
stipulated date, the Pawnee may sell the goods after
giving the Pawnor a reasonable notice. This notice is
compulsory in all cases of pledge, even when the
instrument of pledge contains an unconditional power
of sale. Therefore, if the Pawnee makes an
unauthorized sale, the Pawnor can file a suit for
redemption of goods by depositing the money,
.treating the sale as if it had never taken place
:Right to accretion
If there has been an increase in the goods pledged,
the Pawnor has a right to take back the goods along
. with the increase

DUTIES OF PAWNOR

He is liable to compensate the Pawnee for the. 1

extraordinary
damages incurred by the Pawnee
. in preserving the goods
To pay the deficit of the sale proceeds over the. 2
amount due if
the Pawnee sells the goods on his
.default, after giving
reasonable notice
.To disclose known faults in the goods pledged. 3
. To compensate for defective title. 4