Specific Contracts: Agency, Deposit, and Guarantee
Exam Snapshot
The Muluki Civil Code 2074 categorizes Agency, Deposit, and Guarantee as special contracts where specific fiduciary duties and tripartite relationships define the legal obligations beyond basic offer-acceptance.
Core Concept
- Agency (प्रतिनिधित्व): A contract where one person (Agent) is authorized to act on behalf of another (Principal) to create legal relations with third parties.
- Deposit (निक्षेप): A contract where one party (Depositor) entrusts goods to another (Depositee/Bailee) for safe custody or specific purpose, with the duty to return them.
- Guarantee (जमानत): A contract where a person (Surety) promises to perform the obligation or discharge the liability of a third person (Debtor) in case of default.
Nepal Law Anchors
- Muluki Civil Code 2074, Part 4 (Contract Law)
- Chapter 12 (Deposit): Sections 591–605
- Chapter 15 (Agency): Sections 629–646
- Chapter 16 (Guarantee): Sections 647–658
Confusable Terms
- Agency vs. Employment: An agent binds the principal to third parties; an employee acts for the employer but does not necessarily possess the power to bind them in external contracts.
- Deposit vs. Sale: In a deposit, the ownership remains with the depositor; in a sale, ownership transfers to the buyer.
MCQ Traps
- Agency Termination: Death, insolvency, or insanity of the principal or agent automatically terminates the agency contract.
- Guarantee Liability: The surety's liability is generally secondary (arises only upon the principal debtor's default), not primary.
Example
A hires a transport company (Agent) to sell his goods. If the company sells the goods to B, the contract legally exists between A and B, not the company and B, because the company acted as A's authorized agent.
Memory Hook
Use the mnemonic D A G: Deposit (Safe keeping), Agency (Authorization), Guarantee (Guaranteeing the debt).
Quick Revision
- Agency requires clear authorization to create legal relations for the principal.
- Deposits impose a duty of care and safe custody on the bailee (depositee).
- Guarantees involve three distinct parties: Principal Debtor, Creditor, and Surety.
- All these contracts are governed by Part 4 of the Muluki Civil Code 2074.