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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..