Contents

Warranty Guarantee Indemnity Parent Company Guarantee Case Studies

Prepared By: Abhinav Bhardwaj (193) (187)

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Paul Vinita

Dhayal (185)

WARRANTY A warranty is a stipulation collateral to the main purpose of the contract, the breach of which gives rise to a claim for damage but not to a right to reject the good and treat the contract as repudiated or broken.

Condition And Warranty Distinguish:

4/28/12 Stipulation

Circumstances under which a breach of condition would be held as a breach of Warranty (Sec. 13)

Buyer elects to treat breach of condition as a breach of warranty. Buyer waives the condition. Unless there is an express or implied contract to the contrary:-

i) Where a contract of sale is not severable and the buyer has accepted the goods or part thereof. ii) Where a contract is for specific goods, the property in which has passed to buyer.
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Remedies available to the buyer on breach of condition and breach of warranty

Repudiate the contract and reject the goods

Elect to treat the breach of condition as breach of warranty and claim damages.

Waive the condition.

In case of breach of warranty by the seller, the buyer has following remedies:

i) To 4/28/12

file a suit in diminution or extinction of the

Implied Warranties and Conditions Warranty as to title (sec. 14) Sale by description (Sec. 15) Sale by sample ( Sec. 17) Sale by sample as well as description (Sec. 15) Warranty as to quite possession free encumberances. Warranty as to quality or fitness.

Buyer Beware Custom or usage of trade. Fraud 4/28/12

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.

Every contract of guarantee has three parties :

Principal Debtor Creditor

4/28/12 Surety

Every contract of guarantee has three agreements :

An agreement between the creditor and principal debtor. An agreement between the surety and the creditor.

An agreement between the surety and the principal debtor.

Consideration in contract of guarantee

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Continuing Guarantee A guarantee which extend to a series of transaction is called a continuing guarantee. Revocation of continuing guarantee

By notice (Sec. 130) By death of the surety (Sec. 131)

By discharge of surety by variance in the term of contract (Sec. 133)

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Invalid guarantee

Guarantee obtained by misrepresentation. Guarantee obtained by concealment. Guarantee or contract that co-surety shall join. Essential elements absent.

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Parent company guarantee It is a written undertaking by Contractors ultimate parent to Client, guaranteeing performance and undertaking to complete obligations under the Contract in the event of default in Contractors performance.

Parent Company Guarantees do not have a financial value but serve as an undertaking .

This parent company guarantee is for use where a company entering into a contract is required by its client 4/28/12 to provide a guarantee of its performance from its parent

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. (Sec. 124) Essentials Contract of indemnity must contain all the essentials of a valid contract. The promisee or the indemnity- holder must have suffered a loss.

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Rights of indemnity holder

Damages Costs All Sums Suit for specific performance

Rights of indemnifier

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Professional Indemnity Case Study

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Thank You
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