Contract Law

Guarantee contract includes three parties namely creditor, principal debtor and surety.

The insurance contract must be signed by both parties (i.e insurer and insured) in an absolute good faith or belief or trust.

In hypothecation, the possession of the property is restrained by the owner and certain rights in that moveable property are transferred to the person in whose favour the property is hypothecated. In a pledge, the possession of goods also passes to the pledgee by way of security, though the possession may be constructive. The true distinction from hypothecation is that the constructive possession of the goods in the case of pledge is specifically secured by the terms of the contract and is continued unabated throughout.

Consideration (no consideration, no contract) exceptions are a. natural love and affection  b. voluntary compensation c. time-barred debt d. completed gift
e. contract of agency f. remission by the promisee

A contract in which one party wins and the other loses is called a wagering contract. A contingent event depends upon happening or non-happening of events.

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Section 171 in the Indian Contract Act, 1872, bankers, factors, wharfingers, attorneys of a High Court and policy-brokers may, in the absence of a contract to the contrary, retain as a security for a general balance of account, any goods bailed to them. But, no other person has a right to retain, as a security for such balance, goods bailed to them, unless there is an express contract to that effect.

Void contract is an agreement not enforceable by law. A void contract is a contract which ceases to be enforceable by law. A contract when originally entered into may be valid and binding on the parties. It may subsequently become void.

Section 127 of Contract Act 1872: Consideration for Guarantee: Anything done, or any promise made, for the benefit of the principal debtor, may be a sufficient consideration to the surety for giving the guarantee. Your remuneration may be a part of consideration for guarantee.

Agreement without consideration is void, unless it is in writing and registered or is a promise to compensate for something done or is a promise to pay a debt barred by limitation law.

A Guarantee which extends to a series of transactions is called a continuing guarantee. A continuing guarantee may at any time be revoked by the surety, as to future transactions, by notice to the creditor. 

A condition is a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated.

Agency law refers to the relationship between a person, or “agent”, that acts on behalf of another person, company, or government, usually called the “master” or “principal". This form of agency can be, and often is, enforced by written agreements made through a power of attorney.

Indemnity contract includes two parties namely, indemnifier and indemnity holder. The person who is promising to pay compensation is called indemnifier and the person whose loss is compensated is called indemnity holder.

As per Section 68 of Indian Contract Act, if necessities are supplied to minor, it is a valid agreement. Minor can also be beneficiary.