Brief of Special Contract-II

UNIT-I: Contract of Indemnity, Guarantee, and Surety

This unit covers the legal framework of indemnity and guarantee under the Indian Contract Act, 1872. A contract of indemnity involves one party compensating another for losses caused by specific events, with the indemnity holder entitled to recover damages and costs. A contract of guarantee involves a surety promising to fulfill the principal debtor’s obligations if they default. Guarantees can be continuing (covering multiple transactions) and revocable under certain conditions. The unit explores the rights of the indemnity holder and surety, including subrogation and discharge from liability. It also distinguishes indemnity from insurance, emphasizing the principle of subrogation. Relevant case: Bank of Bihar v. Damodar Prasad, AIR 1969 SC, which clarifies the surety’s liability and the scope of indemnity.

UNIT-II: Bailment and Agency

This unit examines bailment and agency under the Indian Contract Act, 1872. Bailment involves delivering goods for a specific purpose, with the bailee obligated to return them. Bailments are classified as gratuitous (no reward) or non-gratuitous (for reward), each with distinct duties for the bailor and bailee. The finder of goods has rights akin to a bailee, with obligations to return goods to the owner. Agency involves an agent acting on behalf of a principal, with the contract formed through express/implied agreements and terminated by revocation, death, or insolvency. Types of agents include general, special, and sub-agents. Relevant case: R.D. Saxena v. Balram Prasad Sharma, AIR 2000 SC 2912, which highlights the fiduciary duties of agents and bailees.

UNIT-III: Partnership Act

This unit focuses on the Indian Partnership Act, 1932, defining a partnership as a relationship between persons sharing profits from a business. Essential elements include mutual agency, profit-sharing, and a lawful business. Partnerships are classified as at-will or particular, distinct from companies and joint Hindu family businesses. Partners have general duties (e.g., good faith, mutual agency) and specific rights/liabilities post-dissolution. The doctrine of holding out imposes liability on non-partners representing themselves as partners. Registration of firms is optional, but non-registration limits legal remedies. The unit also covers dissolution modes and minor partners’ status. Relevant case: Sales Jing Sugar Mills Ltd. v. State of Mysore, (1972) 1 SCC 23, clarifying partnership obligations.

UNIT-IV: Sale of Goods Act

This unit covers the Sale of Goods Act, 1930, governing contracts for the sale of movable goods. A contract of sale transfers ownership, distinct from an agreement to sell (future transfer). Goods are categorized as ascertained, unascertained, or specific, with implied conditions (e.g., merchantability) and warranties (e.g., quiet possession). The doctrine of caveat Emptor (buyer beware) applies unless exceptions like fraud exist. The principle of nemo dat quod non habet prevents selling goods without title, with exceptions for estoppel or sale by a mercantile agent. Unpaid sellers have rights like lien, stoppage in transit, and resale. Relevant cases: TCS v. State of A.P., AIR 2005 SC 371 and State of Maharashtra v. Britannia Biscuits Co. Ltd., 1995 Supp.(2) SCC 72, addressing sale contracts and seller obligations.