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.

In 2006, Reserve Bank of India announced the revised Banking Ombudsman Scheme with enlarged scope that included customer complaints on certain new areas, such as credit card complaints, deficiencies in providing the promised services even by banks' sales agents, levying service charges without prior notice to the customer and non-adherence to the fair practices code as adopted by individual banks. The 2006 scheme provides a forum to bank customers to seek redressal of their most common complaints against banks, including those relating to credit cards, service charges, promises given by the sales agents of banks, but not kept by banks, as also, delays in delivery of bank services. 

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.

The conditions of negotiability are (i) The instrument should be freely transferable. An instrument cannot be negotiable unless it is such and in such state that the true owner could transfer by simple delivery or endorsement and delivery. (ii) The person who takes it for value and in good faith is not affected by the defect in the title of the transferor. (iii) Such a person can sue upon the instrument in his own name.

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.