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Indemnity, Guarantee and Bailment Act [Cap 232]

LAWS OF FIJI

Ed. 1978]

CHAPTER 232

INDEMNITY, GUARANTEE AND BAILMENT

ARRANGEMENT OF SECTIONS

SECTION
1. Short title.

PART I-INDEMNITY

2. Contract of indemnity defined.
3. Rights and liabilities of indemnity holders.

PART II-GUARANTEE

4. Contract of guarantee.
5. Consideration for guarantee.
6. Liability of surety.
7. Continuing guarantee.
8. Revocation of continuing guarantee.
9. Revocation by surety's death.
10. Liability of two persons primarily liable not affected by private arrangement between them as to suretyship.
11. Discharge of surety by variance in terms of contract.
12. Discharge of surety by release or discharge of principal debtor.
13. Discharge of surety when creditor compounds with principal debtor, etc.
14. Exception.
15. Creditor's forbearance to sue does not discharge surety.
16. Release of one co-surety does not discharge others.
17. Discharge of surety by creditor's act or omission.
18. Rights of surety on payment or performance.
19. Surety's right to benefit of creditor's securities.
20. Guarantee obtained by mis-representation.
21. Or by concealment-invalid.
22. Conditional guarantee.
23. Implied promise to indemnify surety.
24. Co-sureties liable to contribute equally.
25. Liability of co-sureties bound in different sums.
26. Guarantee for balance of account.

PART III-BAILMENTS

27. Bailment, bailor and bailee defined.
28. Delivery to bailee how made.
29. Bailor's duty to disclose faults in goods bailed.
30. Care to be taken by bailee.
31. Bailee when not liable for loss, etc., of thing bailed.
32. Termination of bailment.
33. Liability of bailee making unauthorised use of goods bailed.
34. Effect of mixture with bailor's consent.
35. Effect of mixture without bailor's consent when the goods can be separated.
36. Effect of mixture without bailor's consent when the goods cannot be separated.
37. Repayment by bailor of necessary expenses.
38. Restoration of things bailed gratuitously.
39. Return of goods bailed.
40. Bailee's responsibility.
41. Termination of gratuitous bailment.
42. Bailor entitled to increase or profit from goods bailed.
43. Bailor's responsibility to bailee.
44. Bailment of several joint owners
45. When bailor has no title.
46. Rights of third person claiming goods bailed.
47. Bailee's particular lien.
48. General lien of bankers, factors, barristers and solicitors, wharfingers and policy-brokers.
49. Pledge, pawnor and pawnee defined.
50. Pawnee's rights of retainer.
51. Pawnee not to retain for debt other than that for which goods are pledged.
52. Pawnee's right as to extraordinary expense incurred.
53. Pawnee's right where pawnor makes default.
54. Defaulting pawnor's right to redeem.
55. Pledge by possessor of goods or of documentary title to goods.
56. Pledge of only a limited interest.
57. Suit by bailor or bailee against wrongdoer.
58. Apportionment of relief or compensation.

PART IV-SPECIAL PROVISIONS

59. Promises or agreement by parol.
60. Consideration for guarantee need riot appear by writing.
61. A surety who discharges the liability to be entitled to assignment of all securities held by the creditor.
62. Representation of character.
63. Effect of Act on Imperial Acts,

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Ordinances Nos. 8 of 1881, 22 of 1918, 35 of 1932, 2 of 1945.

AN ACT IN RELATION TO THE CONTRACT OF INDEMNITY, GUARANTEE AND BAILMENT AND OTHER KINDRED MATTERS

[9th April, 1881.]

Short title

1. This Act may be cited as the Indemnity, Guarantee and Bailment Act.

PART I-INDEMNITY

Contract of indemnity defined

2. A contract by which one party promises to save the other from loss caused to him by the conduct of the promiser himself or by the conduct of any other person is called a contract of indemnity.

Rights and liabilities of indemnity holders

3. The promisee in a contract of indemnity acting within the scope of his authority is entitled to recover from the promisor-

(a) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;

(b) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promisor and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;

(c) all sums which he may have paid under the terms of any compromise of any such suit if the compromise was not contrary to the orders of the promisor and it was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.

PART II-GUARANTEE

Contract of guarantee

4. A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default. The person who gives the guarantee is called the surety, the person in respect of whose default the guarantee is given is called the principal debtor, and the person to whom the guarantee is given is called the creditor.
(Amended by 22 of 1918, s. 8.)

Consideration for guarantee

5. 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.

Liability of surety

6. The liability of the surety is co-extensive with that of the principal debtor unless otherwise provided by the contract.

Continuing guarantee

7. A guarantee which extends to a series of transactions is called a continuing guarantee.

Revocation of continuing guarantee

8. A continuing guarantee may at any time be revoked by the surety as to future transactions by notice to the creditor.

Revocation by surety's death

9. The death of the surety operates in the absence of any contract to the contrary as a revocation of a continuing guarantee so far as regards future transactions.

Liability of two persons primarily liable not affected by private arrangement between them as to suretyship

10. Where two persons contract with a third person to undertake a certain liability and also contract with each other that one of them shall be liable only on the default of the other, the third person not being a party to such contract, the liability of each of such two persons to the third person under the first contract is not affected by the existence of the second contract although such third person may have been aware of its existence.

Discharge of surety by variance in terms of contract

11. Any variance made without the surety's consent in the terms of the contract between the principal and the creditor discharges the surety as to transactions subsequent to the variance.

Discharge of surety by release or discharge of principal debtor

12. The surety is discharged by any contract between the creditor and the principal debtor by which the principal debtor is released, or by any act or omission of the creditor the legal consequence of which is the discharge of the principal debtor.

Discharge of surety when creditor compounds with principal debtor, etc.

13. A contract between the creditor and the principal debtor by which the creditor makes a composition with or promises to give time to or not to sue the principal debtor discharges the surety unless the surety assents to such contract.

Exception

14. Where a contract to give time to the principal debtor is made by the creditor with a third person and not with the principal debtor, the surety is not discharged.

Creditor's forbearance to sue does not discharge surety

15. Mere forbearance on the part of the creditor to sue the principal debtor or to enforce any other remedy against him does not, in the absence of any provision in the guarantee to the contrary, discharge the surety.

Release of one co-surety does not discharge others

16. Where they are co-sureties, a release by the creditor of one of them does not discharge the others, neither does if free the surety so released from his responsibility to the other sureties.

Discharge of surety by creditor's act or omission

17. If the creditor does any act which is inconsistent with the rights of the surety or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of the surety himself against the principal debtor is thereby impaired, the surety is discharged.

Rights of surety on payment or performance

18. Where a guaranteed debt has become due or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor.

Surety's right to creditor's benefit of securities

19. A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not, and if the creditor loses or, without the consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security.

Guarantee obtained by misrepresentation

20. Any guarantee which has been obtained by means of misrepresentation made by the creditor or with his knowledge and assent concerning a material part of the transaction is invalid.

Or by concealment-invalid

21. Any guarantee which the creditor has obtained by means of keeping silence as to a material circumstance is invalid

Conditional guarantee

22. Where a person gives a guarantee upon a contract that the creditor shall not act upon it until another person has joined in it as co-surety, the guarantee is not valid if that other person does not join.

Implied promise to indemnify surety

23. In every contract of guarantee there is an implied promise by the principal debtor to indemnify the surety, and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee, but no sum which he has paid wrongfully.

Co-sureties liable to contribute equally

24. Where two or more persons are co-sureties for the same debt or duty, either jointly or severally and whether under the same or different contracts and whether with or without the knowledge of each other, the co-sureties, in the absence of any contract to the contrary, are liable as between themselves to pay each an equal share of the whole debt or of that part of it which remains unpaid by the principal debtor.

Liability of co-sureties bound in different sums

25. Co-sureties who are bound in different sums are liable to pay equally as far as the limits of their respective obligations permit.

Guarantee for balance of account

26. (1) A surety or co-sureties may become guarantee for the payment of the balance due upon a cash account at a bank to be operated on by the principal debtor.

Guarantee to be considered continuing:
Remedy of principal debtor or sureties in case of error

(2) The guarantee in this case is a continuing guarantee applicable to an account which is constantly changing by the drawing out and paying in of money where the surety or co-sureties equally with the principal debtor are each liable for the whole balance which may be due on the account up to the amount of the guarantee as stipulated in the bond. The amount due is by virtue of the provisions of section 25 of the Registration Act taken to be the sum standing to the debit of the principal debtor within the limit of the guarantee in the books of the bank a certified by the proper officer thereof, and a warrant of execution may be obtained upon the bond against the principal debtor, the surety or co-sureties for such sum. The remedy of the principal debtor or sureties in the case of important error is by injunction to stay the warrant of execution. The bank cannot discharge, destroy or forfeit collateral securities without freeing the sureties, but is not bound to proceed against the principal debtor who holds the credit before claiming from the sureties under the bond.
(Cap. 224.)

PART III-BAILMENTS

Bailment, bailor and bailee defined

27. A bailment is the delivery of goods by one person to another for some purpose upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them. The person delivering the goods is called the bailor. The person to whom they are delivered is called the bailee.

Delivery to bailee how made

28. The delivery to the bailee may be made by doing anything which has the effect of putting the goods in the possession of the intended bailee or of any person authorised to hold them on his behalf.

Bailor's duty to disclose faults in goods bailed

29. The bailor is bound to disclose to the bailee faults in the goods bailed or which the bailor is aware and which materially interfere with the use of them or expose the bailee to extraordinary risks, and if he does not make such disclosure he is responsible for damage arising to the bailee directly from such faults. If the goods are bailed for hire, the bailor is responsible for such damage whether he was or was not aware of the existence of such faults in the goods bailed

Care to be taken by bailee

30. In all cases of bailment the bailee is bound to take as much care of the goods bailed to him as a man of ordinary prudence would under similar circumstances take of his own goods of the same bulk, quality and value as the goods bailed.

Bailee when not liable for loss, etc., of thing bailed

31. The bailee, in the absence of any special contract, is not responsible for the loss, destruction or deterioration of the thing bailed if he has taken the amount of care of it described in section 30

Termination of bailment

32. A contract of bailment is voidable at the option of the bailor if the bailee does any act with regard to the goods bailed inconsistent with the conditions of the bailment.

Liability of bailee making unauthorised use of goods bailed

33. If the bailee makes any use of the goods bailed which is not according to the conditions of the bailment, he is liable to make compensation to the bailor for any damage arising to the goods from or during such use of them.

Effect of mixture with bailor's consent

34. If the bailee with the consent of the bailor mixes the goods of the bailee with his own goods, the bailor and the bailee shall have an interest in proportion to their respective shares in the mixture thus produced.

Effect of mixture without bailor's consent when the goods can be separated

35. If the bailee without the consent of the bailor mixes the goods of the bailor with his own goods and the goods can be separated or divided, the property in the goods remains in the parties respectively, but the bailee is bound to bear the expense of separation or division and any damage arising from the mixture.

Effect of mixture without bailor's consent when the goods cannot be separated

36. If the bailee without the consent of the bailor mixes the goods of the bailor with his own goods in such a manner that it is impossible to separate the goods bailed from the other goods and deliver them back, the bailor is entitled to be compensated by the bailee for the loss of the goods.

Repayment by bailor of necessary expenses

37. Where by the conditions of the bailment the goods are to be kept or to be carried or to have work done upon them by the bailee for the bailor, and the bailee is to receive no remuneration the bailor shall repay to the bailee the necessary expenses incurred by him for the purpose of the bailment.

Restoration of things bailed gratuitously

38. The lender of a thing for use may at any time require its return if the loan was gratuitous, even though he lent it for a specified time or purpose. But if on the faith of such loan made for a specified time or purpose the borrower has acted in such a manner that the return of the thing lent before the time agreed upon would cause him loss exceeding the benefit actually derived by him from the loan, the lender must, if he compels the return, indemnify the borrower for the amount in which the loss so occasioned exceeds the benefit so derived.

Return of goods bailed

39. It is the duty of the bailee to return or deliver according to the bailor's directions the goods bailed without demand as soon as the time for which they were bailed has expired or the purpose for which they were bailed has been accomplished.

Bailee's responsibility

40. If by the fault of the bailee the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods from that time.

Termination of gratuitous bailment

41. A gratuitous bailment is terminated by the death either of the bailor or of the bailee.

Bailor entitled to increase or profit from goods bailed

42. In the absence of any contract to the contrary, the bailee is bound to deliver to the bailor or according to his directions any increase or profit which may have accrued from the goods bailed.

Bailor's responsibility to bailee

43. The bailor is responsible to the bailee for any loss which the bailee may sustain by reason that the bailor was not entitled to make the bailment or to receive back the goods or to give directions respecting them.

Bailment of several joint owners

44. If several joint owners of goods bail them, the bailee may deliver them back to or according to the directions of one joint owner without the consent of all in the absence of any agreement to the contrary.

When bailor has no title

45. If the bailor has no title to the goods and the bailee in good faith delivers them back to or according to the directions of the bailor, the bailee is not responsible to the owner in respect of such delivery.

Rights of third person claiming goods bailed

46. If a person other than the bailor claims goods bailed, such person may apply to a court of competent jurisdiction to stop the delivery of the goods to the bailor and to decide the title to the goods.
(Amended by 2 of 1945, s. 13.)

Bailee's particular lien

47. Where the bailee has in accordance with the purpose of the bailment rendered any service involving the exercise of labour or skill in respect of the goods bailed, he has in the absence of a contract to the contrary a right to retain such goods until he receives due remuneration for the services he has rendered in respect of them.

General lien of bankers, factors, barristers and solicitors, wharfingers and policy-brokers

48. Bankers, factors, barristers and solicitors, wharfingers 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 persons have a right to retain as a security for such balance goods bailed to them unless there is an express contract to that effect.

Pledge, pawnor and pawnee defined

49. The bailment of goods as security for payment of a debt or performance of a promise is called pledge. The bailor is in this case called the pawnor. The bailee is called the pawnee.

Pawnee's rights of retainer

50. The Pawnee may retain the goods pledged not only for payment of the debt or the performance of the promise but for the interest of the debt and all necessary expenses incurred by him in respect of the possession or for the preservation of the goods pledged.

Pawnee not to retain for debt other than that for which goods are pledged

51. The Pawnee shall not, in the absence of a contract to that effect, retain the goods pledged for any debt or promise other than the debt or promise for which they are pledged, but such contract in the absence of anything to the contrary shall be presumed in regard to subsequent advances made by the Pawnee.

Pawnee's right as to extraordinary expense incurred

52. The Pawnee is entitled to receive from the pawnor extraordinary expenses properly incurred by him for the preservation of the goods pledged.

Pawnee's right where pawnor makes default

53. If the pawnor makes default in payment of the debt or performance at the stipulated time of the promise in respect of which the goods were pledged, the pawnee may bring a suit against the pawnor upon the debt or promise and retain the goods pledged as a collateral security or he may sell the thing pledged on giving the pawnor reasonable notice of the sale. If the proceeds of such sale are less than the amount due in respect of the debt or promise the pawnor is still liable to pay the balance. If the proceeds of the sale are greater than the amount so due the pawnee shall pay over the surplus to the pawnor.

Defaulting pawnor's right to redeem

54. If a time is stipulated for the payment of the debt or performance of the promise for which the pledge is made, and the pawnor makes default in payment of the debt or performance of the promise at the stipulated time, he may redeem the goods pledged at any subsequent time before the actual sale of them but he must in that case pay in addition any expenses which have arisen from his default.

Pledge by possessor of goods or of documentary title to goods

55. A person who is in possession of any goods or of any bill of lading, dock-warrant, warehouse-keeper's certificate, wharfinger's certificate, or warrant or order for delivery or any other document of title to goods, may make a valid pledge of such goods or documents:

Provided that-

(a) the pawnee acts in good faith and under circumstances which are not such as to raise a reasonable presumption that the pawnor is acting improperly;

(b) such goods or documents have not been obtained from their lawful owner or from any person in lawful custody of them by means of an offence or fraud.

Pledge of only a limited interest

56. Where a person pledges goods in which he has only a limited interest, the pledge is valid to the extent of that interest.

Suit by bailor or bailee against wrongdoer

57. If the third person wrongfully deprives the bailee of the use or possession of the goods bailed, or does them any injury, the bailee is entitled to use such remedies as the owner might have used in the like case if no bailment had been made, and either the bailor or the bailee may bring a suit against a third person for such deprivation or injury.

Apportionment of relief or compensation

58. Whatever is obtained by way of relief or compensation in such suit shall, as between the bailor and bailee, be dealt with according to their respective interests.

PART IV-SPECIAL PROVISIONS

Promises or agreements by parol

*59. No action shall be brought-

(a) whereby to charge any executor or administrator upon any special promise to answer damages out of his own estate; or

(b) whereby to charge the defendant upon any special promise to answer for the debt, default or miscarriage of another person; or

(c) to charge any person upon any agreement made upon consideration of marriage; or

(d) upon any contract or sale of lands, tenements or hereditaments or any interest in or concerning them; or

(e) upon any agreement that is not to be performed within the space of one year from the making thereof,

unless the agreement upon which such action is to be brought or some memorandum or note thereof is in writing and signed by the party to be charged there or some other person thereunto by him lawfully authorised.
*inserted by 22 of 1918.

Consideration for guarantee need not appear by writing

*60. No special promise made by any person to answer for the debt, default or miscarriage of another person, being in writing and signed by the party to be charged therewith or some other person by him thereunto lawfully authorised, shall be deemed invalid to support an action, suit or other proceeding to charge the person by whom such promise was made by reason only that the consideration of such promise does not appear in writing or by necessary inference from a written document.
*inserted by 22 of 1918

A surety who discharges the liability to be entitled to assignment of all securities held by the creditor

*61. Every person who, being surety for the debt or duty of another or being liable with another for any debt or duty, pays such debt or performs such duty, shall be entitled to have assigned to him or to a trustee for him every judgment, specialty or other security which is held by the creditor in respect of such debt or duty, whether such judgment, specialty or other security is or is not deemed at law to have been satisfied by the payment of the debt or performance of the duty, and such person shall be entitled to stand in the place of the creditor and to use all the remedies and, if need be and upon a proper indemnity, to use the name of the creditor in any action or other proceeding at law or inequity in order to obtain from the principal debtor or any co-surety, co-contractor or co-debtor, as the case may be, indemnification for the advances made and loss sustained by the person who has so paid such debt or performed such duty, and such payment or performance so made by such surety shall not be pleadable in bar of any such action or other proceeding by him:

Provided always that no co-surety, co-contractor and no co-debtor shall be entitled to recover from any other co-surety, co-contractor or co-debtor by the means aforesaid more than the just proportion to which, as between those parties themselves, such last-mentioned person shall be justly liable.
*inserted by 22 of 1918

Representation of character

*62. No action shall be brought whereby to charge any person upon or by reason of any representation or assurance made or given concerning or relating to the character, conduct, credit, ability, trade or dealings of any other person to the intent or purpose that such other person may obtain credit, money or goods thereupon unless such representation or assurance by made in writing signed by the party to be charged therewith.
*inserted by 22 of 1918

Effect of Act on Imperial Acts

*63. Nothing in this Part shall be deemed to affect the provisions of the Supreme Court Act in so far as the application of any Imperial Act by virtue thereof shall not be repugnant to the contents of this Part.
(Cap. 13)
*inserted by 22 of 1918

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