WHAT IS THE CONTRACT OF INDEMINITY, CONTIGENT CONTRACT, N GURARENTEE, COMPARE THEIR FUTURE?

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CONTINGENT CONTRACT
DEFINITION
Section 31. of the Contract Act, 1872 defines "Contingent contract" as A "contingent contract" is a contract to do or not to do something, if some event, collateral to such contract, does or does not happen.

Essentials of contingent contract

All contracts of insurance and indemnity are obviously contingent. Contingent contracts are enforced on happening of an event (Section 32). Contingent contracts are not enforced on an event not happening (Section 33). Contingency basically is dependent on act of party.
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COLLATERAL EVENT

Collateral event means connected event. Not part of consideration but part of contract

Example
if I offer a reward for the recovery of lost goods, there is not a contingent contract; there is no contract at all unless and until some one, acting on the offer, finds the goods and brings them to me.

PERFORMANCE OF CONTINGENT CONTRACTS HAPPENING OF EVENT

Depends on happening of a future event 1/21/13

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Non Happening of Event

Contingent contract is enforceable if an un certain future event does not happen

Un Certain Agreement

Meanings or terms are not certain The terms of contract are not capable of being certain

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WAGERING AGREEMENT

Wager means a bet. An agreement to pay money or money worth on happening or non happening of event Each party has equal chance to win or lose the bet Parties should not have any other interest other than amount

ESSENTIAL OF WAGER

Promise to pay money or money worth Depends on happening or non happening of event One party is to win, other is to lose Parties should not have any other interest other than amount

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CONTRACT OF INDEMNITY
A contract of indemnity is a contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person (Section 124).

Essentials of contract of indemnity

Contain all essentials of valid contract Contract between two parties Promise to save the loss of other person which may he suffer Express or implied Parties in a contract of indemnity: There are two parties. One is indemnifier, who promises to make good the loss, and the other is indemnified or indemnity holder, the one whose loss is made good (Section 124).

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 Rights of Indemnity Holder:

Damages are paid all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies. Cost of suit All costs which he may be compelled to pay brining or defending such suit. Compromise payment An indemnity holder can compromise a claim on the best term he can and then bring an action on the contract of indemnity (Section 125).

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 Rights of indemnifier:

Rights of the indemnifier are analogous to the rights of a surety under Section 141. Indemnifier, on making good the indemnity, be entitled to succeed to all the ways and means by which the person indemnified might have protected himself against or reimbursed himself for the loss.

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Contract of guarantee
A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default.

Example: A requests B to lend Rs. 1000 to C and

guarantees if C does not pay the amount, he will pay. This is contract of guarantee.

Parties to a contract of guarantee

Surety The person who gives guarantee Creditor The person to whom guarantee is given Principal Debtor The person in respect of whose default the guarantee is given.
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Agreements within Contract of Guarantee

Contract of guarantee comprises of three collateral contracts: Between creditor and principal debtor, there is a contract out of which the guaranteed debt arises. Between surety and creditor, there is a contract by which surety guaranteed to pay to creditor, principal debtors debt in case of default. Between surety and principal debtor, there is a contract that principal debtor shall indemnify surety in case surety pays in the event of default by principal debtor.

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Essentials of Contract of Guarantee

Tripartite contract Consent of all three parties is necessary Absence of consent of any of them no contract is made. Liability must be legally enforceable. If the liability does not exist, there cannot be a contract of guarantee. A contract of guarantee must meet all the requirements of a valid contract. But if a principal debtor goes mad in that case surety is regarded as the principal debtor and is liable personally Writing is not necessary and it can be oral or written.

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Difference between Indemnity and guarantee

Indemnity Guarantee Number of parties

Number of contract

Two parties involve Three parties, creditor, principal debtor, surety Indemnifier and indemnity holder Three contracts involved between contacting parties

Nature of Liability

One contact is involve Liability of surety is secondary

Request

Liability of indemnifier is primary and independent Debtor requests to surety to give the guarantee Indemnifier promise with out request of Other party 1/21/13

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Existence of Liability

Filling of suit

Liability of indemnifier arises on happening of event surety already exists Performance is guaranteed by surety Indemnifier cannot suit the third party for loss Surety after paying to creditor can sue against the principal debtor Security of debt to save the person from loss Basic purpose is Performance of Contract

Purpose

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