Short notes: nature of lien; indemnity and guarantee

Notes are written on two of the four topics: (ii) and (iv).

(ii) Nature of lien. A lien lets a person who holds someone else's goods keep them until what is owed to him is paid. It is only a right to hold on to the goods, not to sell them, it lasts only while he keeps possession, and the parties may agree to exclude it. The Indian Contract Act, 1872 knows two kinds:

• Particular lien (s. 170) attaches only to the goods on which the work was done. A bailee who, for the purpose of the bailment, has spent labour or skill on the goods may keep them until he is paid for that work, unless the contract says otherwise. A bookbinder given a firm's printed reports to bind may keep the bound volumes until the binding charge is paid, but cannot hold them for an unpaid bill on some earlier job.
• General lien (s. 171) covers any goods of the debtor in the holder's hands, for the whole balance of account between them. The Act gives it only to bankers, factors, wharfingers, attorneys of a High Court and policy brokers, unless the contract excludes it. A bank that holds a customer's cheques and bills for collection in the ordinary course of banking may apply them against an overdraft he has not cleared; articles left with it only for safe custody are outside the lien.

(iv) Indemnity and guarantee. In an indemnity (s. 124) one person promises to save another from loss caused by the promisor's own conduct or by the conduct of any other person; in a guarantee (s. 126) the surety promises to answer for a third person's debt or promise if that person fails. A promise to cover a warehouse owner's losses from a fire is an indemnity; a parent's promise to a bank to repay a child's loan if the child does not is a guarantee. They differ: