Business law - Special Contracts - An Overview

A Special Contract refers to an agreement that involves unique or specific terms that differ from standard or common contracts. These contracts are often tailored to meet the specific needs or circumstances of the parties involved. They may address complex, unusual, or niche situations that standard contracts do not typically cover. Special contracts can appear in various fields, such as law, business, construction, and employment

1. BUSINESS LAW ( SPECIAL CONTRACTS ) Dr DINESH S Assistant Professor Department of Management Sciences Sri Ramakrishna College of Arts & Science (Autonomous) Coimbatore - 641 006 Tamil Nadu, India

2. Bailment Concept : Bailment refers to a legal relationship in which the owner of goods (the " bailor ") temporarily transfers possession of goods to another party (the " bailee ") for a specific purpose under a contract, with the condition that the goods will be returned or otherwise dealt with as per the bailor's directions. Rights and Duties of Parties : Bailor’s Rights : Right to get the goods back in the same condition (unless the goods are perishable or have been damaged due to the bailee's negligence). Bailee’s Rights : Right to compensation if they are acting in good faith and fulfilling the terms of the contract. Bailor’s Duties : Duty to disclose any defects in the goods that could cause harm to the bailee . Bailee’s Duties : Duty to take reasonable care of the goods and not use them for personal gain or purposes outside the scope of the agreement.

3. Essentials of Bailment Delivery of goods. A contract to return the goods after a certain period or upon the fulfillment of a purpose. Temporary transfer of possession (not ownership). Effect : The bailee is liable for negligence if the goods are damaged or lost due to their failure to take reasonable care. If the goods are returned on time or purpose fulfilled, the bailment is considered completed.

4. Pledge Concept : A pledge is a form of bailment where goods are delivered as security for a debt or obligation. The creditor ( pledgee ) holds the goods until the debt is repaid, at which point the goods are returned to the debtor ( pledgor ). Rights and Duties of Parties : Pledger’s Rights : Right to reclaim the goods once the debt is repaid. Pledgee’s Rights : Right to retain the goods until the debt is paid, and possibly sell the goods if the debtor defaults. Pledger’s Duties : Duty to pay back the debt in the agreed time. Pledgee’s Duties : Duty to keep the goods in safe custody and return them once the debt is paid. Essentials : Delivery of goods as security. A contract (often written) specifying the debt and the security. A condition that the goods are held until the obligation is fulfilled. Effect : If the debtor defaults on repayment, the pledgee can sell the goods to recover the debt .

5. Indemnity Concept : An indemnity is a contractual agreement where one party (the indemnifier) promises to compensate the other party (the indemnity holder) for any loss or damage incurred due to specific events or actions. Rights and Duties of Parties : Indemnifier’s Rights : Right to seek relief if the indemnity holder acts in a way that increases the indemnifier’s liability. Indemnity Holder’s Rights : Right to be compensated for loss or damage as per the contract. Indemnifier’s Duties : Duty to compensate the indemnity holder in case of a specified loss. Indemnity Holder’s Duties : Duty to notify the indemnifier of any loss or damage covered by the indemnity. Essentials : Agreement specifying the indemnifier’s promise. A loss or damage must occur as per the conditions of the indemnity. The indemnifier must compensate or hold harmless the indemnity holder from the loss. Effect : The indemnifier is obligated to compensate for the loss or damage, irrespective of whether the indemnity holder was negligent, unless explicitly excluded in the contract .

6. Guarantee Concept : A guarantee is a contract where a person (the guarantor) agrees to pay or perform the obligations of another party (the principal debtor) if that party fails to fulfill the contractual obligations. Rights and Duties of Parties : Guarantor’s Rights : Right to be indemnified by the principal debtor if they end up paying the debt. Creditor’s Rights : Right to claim payment from the guarantor if the debtor defaults. Guarantor’s Duties : Duty to fulfill the obligations if the principal debtor defaults. Debtor’s Duties : Duty to fulfill the obligations, as the guarantor is only secondary. Essentials : A contract of guarantee specifying the debtor’s obligation. A promise from the guarantor to assume responsibility if the debtor defaults. A written agreement (in most cases) and clarity on the terms. Effect : If the principal debtor defaults, the guarantor is bound to perform the obligation as per the agreement .

7. Mortgage Concept : A mortgage is a security interest in real property, where the owner of the property (the mortgagor) pledges the property to a lender (the mortgagee) as collateral for a loan. Rights and Duties of Parties : Mortgagor’s Rights : Right to retain possession and use the property unless there is a default. Mortgagee’s Rights : Right to take possession or sell the property if the mortgagor defaults on the loan. Mortgagor’s Duties : Duty to repay the loan as agreed and maintain the property. Mortgagee’s Duties : Duty to ensure that the mortgagor is not dispossessed unless they default. Essentials : A loan agreement with security in the form of real property. Transfer of an interest in the property to secure the debt. The mortgage agreement must be in writing. Effect : The mortgagee has a right to seize and sell the mortgaged property if the mortgagor defaults on repayment, subject to local laws .

8. Purchase Contract – NCNR (Non-Cancellable, Non-Returnable) Concept : An NCNR contract is a purchase agreement in which the buyer agrees that the purchase is final and cannot be canceled or returned, regardless of the circumstances. Rights and Duties of Parties : Buyer’s Rights : Limited, as they cannot cancel or return the goods. They still have rights to claim against defective goods. Seller’s Rights : Right to receive payment as per the terms, without risk of cancellation. Buyer’s Duties : Duty to accept and pay for the goods as per the contract. Seller’s Duties : Duty to deliver the goods as agreed in the contract. Essentials : Clear terms stating that the contract is non-cancellable and non-returnable. Goods must be delivered in accordance with the contract. Both parties must agree to these terms in writing. Effect : Once the buyer accepts the goods, they cannot cancel or return the goods, unless there is a breach of the contract (e.g., if the goods are defective or not as described ).

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