indian contract act part 2

8/8/2019 Indian Contract Act Part 2

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Special and Modern Contracts


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Special Contracts

-Special because some feature of

contract formation is missing in these

special contracts.-Types of Special Contracts

Bailment

SuretyAgency

Pledge


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Bailment

Examples : Parking ; Cold Storage ;

Warehousing

Rights and duties of Bailor andBailee.

Bailment is a special contract

because of gratuitous bailment

wherein the element of Consideration

is missing. E.g...Car given to your

neighbour while you go on a holiday.


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Duties

Bailor

To disclose faults in

the goods.

Liability for breach of

warranty as to title.

To bear expenses in

case of gratuitous

bailment.

Bailee

y To take care of the

goods bailed.

y Not to make

unauthorised use of

goods.

y Not to mix bailors

goods with his own.y To return the goods

bailed.

y To return any accretion

of goods bailed.


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Pledge

Moveable goods such as jewellery orshares are pledged with banks /moneylenders to avail loans.

The pledgors rights and duties vis--visthe pledgees duties and rights.

Special Contract because pledgee hasright to sell pledged goods in casepledgor fails to pay. Though pledgeedoes not have ownership can sell thegoods to recover his dues providednotice is given to the pledgor.


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Rights of a PledgeeRight to sue the pledgor on default.

Right to sell the things pledged on givingsuitable notice.

Right to claim damages because of non

disclosure of any default or fault.Right to claim damages suffered becauseof defective title of the pledgor.

Pledgees rights are not limited to his

interest in goods.Right to recover any extraordinaryexpenditure.


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Duties of a Pledgee

Taking care of goods.

Not putting the goods to unauthorised

use.Return of goods including accruals.


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Agency

The Principal and agent relationship

e.g.. Auto dealers.

The principals duties and rights vis--vis the agents rights and duties.

Special Contract because though

Agent is not the owner of goods he

still has right to sell the goods.


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AgentDuties

To conduct the business of anagency according to the principals

directions and not to deviate even

for the benefit of the principal.

To conduct the business with the

skill and diligence generally

possessed.To render proper accounts.

In case of difficulty, communicate

with principal.

Not to make secret profits.

Not to deal on his own account.

Not entitled to remuneration for

bad business conduct.

Rights

Right to receive agreed and

reasonable remuneration.

Right to retain moneys of principal

towards advance/expenses.

Right of lien i.e. to retain

properties of the principal for

commission, expenses etc.Right to be indemnified for all acts

done within his rights.


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Surety

Example : surety given by guardian

on behalf of student for a bank loan

wherein the surety assures the bank

that in case the student does not pay

back the bank the surety would do so.

Special contract because the surety

has no consideration in this contract.

Principle of subrogation.


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Rights of Surety

Right of subrogation, i.e. when the

surety discharges the debts, the rights

of the creditor pass on to the surety

as far as claiming the same from

debtor is concerned.

Right to be indemnified for the sums

paid.

Right against co sureties to claim their

part of the contribution in case he has

paid in excess.


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Liabilities of Surety

It is co-extensive with the debtor.


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Rights & Obligations of the Creditor in a Contract of Surety

He can claim his dues from the surety as soon as the debtor

fails to fulfill his obligations.

He need not wait for exhausting all the remedies.

It is expected the that the creditor would not change the

agreement without due consultation and agreement of thesurety.

The creditor should not release the principle debtor from his

debt.

He must not infringe on the rights of the surety.

Forbearance of action against the debtor does not absolvethe surety from his obligations under the contract.


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Modern Contracts

Infrastructure

Joint Ventures

FranchisesCyber Contracts

( while remaining within the overall

parameters of a contract under theIndian Contract Act they have to meet

the dynamics and variations of

modern contracts.)


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Example

Infrastructure : long gestation periods

; basic premises such as

economics(power)/

policy(airports)/technology(telecom).

Joint Ventures : multiple agreements

of technology transfer / financing /

management agreements etc..

indian contract act part 2

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