In Section 124 of the Indian Contract Act, the term "indemnity" has a very specific meaning. It says that a "contract of indemnity" is a contract in which one party promises to protect the other from a loss brought on by the other party's compliance with the promisor's contract or by another party's actions. Therefore, the loss must be the result of human agency, and the contract seeks to make good on a loss brought on by human agency. A contract of indemnification cannot be used, for instance, to cover the loss of cargo at sea as a result of a storm.
Essentials of Indemnity contract:
Thus, the main components of the indemnity special contract can be summed up as follows:
There must be two parties, namely the promisee or indemnified or indemnity-holder and the promisor or indemnifier.
To shield the promisee from the loss, a contract of indemnification is taken into. The loss may have been brought about by the promisor's or another person's sanctions.
The agreement to indemnify may be expressed, that is, made by spoken or written words, or implied, that is, inferred from the actions of the parties or the specific facts of the case.
A contract of indemnity is a unique type of agreement. They are subject to the general contract law principles outlined in Sections 1 through 75 of the Indian Contract Act, of 1872. As a result, it must have each requirement for a legal contract.
There is only one contract between the indemnifier and the indemnified indemnity agreements.
Contract of Guarantee
A "contract of guarantee" is a contract that promises to fulfill a third party's obligation or release them from it if they fail to do so, as defined under Section 126 of the 1872 Contract Act. The "surety" is the one who provides the guarantee, while the "principal debtor" is the party whose default is the subject of the guarantee. The term "creditor" refers to the party receiving the guarantee. Oral or written guarantees are both acceptable. A guarantee is described as "a promise to answer for the debt, default, or miscarriage of another" in English law.
Essentials of guarantee contract
Therefore, the fundamental components of a guarantee contract can be summed up as follows:
A written or verbal contract is possible.
Principal Debtor, Surety, and Creditor Present
Observance of requirements of a typical contract, including but not limited to
It is necessary to take assurance into account.
(Sections 142 and 143) The promise should not be obtained through deception or concealment.
Contract of Bailment
The French verb "ballier" (which means "to deliver") is where the word "bailment" first appeared. Bailment is a compound word that is made up of the phrases "handing over" and "change of possession." A bailment is defined by Section 148 of the Act as the transfer of goods from one person to another for a particular purpose with the requirement that the goods be returned or otherwise disposed of by the instructions of the person who gave them. The individual who delivers the goods is known as the "bailor." The person who receives them is known as the "bailee".
Essentials of bailment
Delivery of some products into your possession.
Delivery of certain items for a particular use.
After the bailment is over, the commodities are returned to the bailor.
Contract of Pledge
A pledge, often known as a "pawn," is a type of bailment of good with a specific function. The Contract Act's Section 172 defines it. the items entrusted as collateral for the repayment of a debt or the fulfillment of a promise. In this instance, the bailee is referred to as the "pawnee" or "pledgee" and the bailor is referred to as the "pawnor" or "pledger". As a result, the pawnee has a specific interest or property in the pledged item. The special property or interest lasts forever and can be used to force the sale of the asset if necessary or to enforce the payment of the debt.
In Bank of Bihar v. the State of Bihar (1971), the Supreme Court explained the unique characteristics of a pledged asset. A situation can occasionally occur when a pledge is made in which the pawnor has a minor interest. Even so, Section 179 states that the pledge is still valid to the extent of that interest.
Essentials of Pledge
The necessities are as follows:
A bailment is required as collateral for the promise's payment or execution.
The commodities are the pledge's subject matter.
The pledged goods must be real.
Goods must be delivered from the pledger to the pledgee.
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