Contract and Indemnity
CONTRACTS OF INDEMNITY
Definition
Section 124 of the Contract Act defines a contract of indemnity as a contract by which one party promises to save the other party from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person. P. contracts to indemnify Q against the consequences of any proceeding which R may. take against Q in respect of a certain sum of Rs. 200. This is a Contract of Indemnity: P is called the indemnifier and Q the Indemnity-holder.
Characteristics
Characteristics (or the requisites) of a Contract of indemnity are as follows :
l. A contract of guarantee must satisfy all the essential elements of a contract. For example, the object must be lawful, there must be free consent etc.
2. The Contract may be express or implied. An express contract is by word or by writing. An implied contract of indemnity comes from the circumstances of the` case or the relationship between the parties.
3. Section 69 implies a promise to indemnify
CONTRACTS OF GUARANTEE
Definition
A contract of guarantee is a contract to perform the promise or discharge the liability, of a third person in case of his default.-Sec. 126.
P lends Rs. 5,000 to Q and R promises to P that if Q does not pay the money R will do so. This is contract of guarantee. Q is called the Principal Debtor, P the Creditor, and R the Guarantor or the Surety.
Classification
Contracts of guarantee may be of three types :
(1) for payment to the Creditor to the Principal Debtor by the Guarantor ;
(2) payment of price for goods sold, and
(3) Fidelity guarantee
i.e. to discharge the liability of a person for good conduct of a service-holder.
A contract of guarantee may be for
(1) a future debt or obligation or for
(2) an existing debt.
A guarantee can also be
(1) a Simple Guarantee or
(2) a Continuing Guarantee
Essentials of a Valid Guarantee
1. A contract of guarantee must satisfy all the essential elements of a contract. (For example, the object
Definition
Section 124 of the Contract Act defines a contract of indemnity as a contract by which one party promises to save the other party from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person. P. contracts to indemnify Q against the consequences of any proceeding which R may. take against Q in respect of a certain sum of Rs. 200. This is a Contract of Indemnity: P is called the indemnifier and Q the Indemnity-holder.
Characteristics
Characteristics (or the requisites) of a Contract of indemnity are as follows :
l. A contract of guarantee must satisfy all the essential elements of a contract. For example, the object must be lawful, there must be free consent etc.
2. The Contract may be express or implied. An express contract is by word or by writing. An implied contract of indemnity comes from the circumstances of the` case or the relationship between the parties.
3. Section 69 implies a promise to indemnify
CONTRACTS OF GUARANTEE
Definition
A contract of guarantee is a contract to perform the promise or discharge the liability, of a third person in case of his default.-Sec. 126.
P lends Rs. 5,000 to Q and R promises to P that if Q does not pay the money R will do so. This is contract of guarantee. Q is called the Principal Debtor, P the Creditor, and R the Guarantor or the Surety.
Classification
Contracts of guarantee may be of three types :
(1) for payment to the Creditor to the Principal Debtor by the Guarantor ;
(2) payment of price for goods sold, and
(3) Fidelity guarantee
i.e. to discharge the liability of a person for good conduct of a service-holder.
A contract of guarantee may be for
(1) a future debt or obligation or for
(2) an existing debt.
A guarantee can also be
(1) a Simple Guarantee or
(2) a Continuing Guarantee
Essentials of a Valid Guarantee
1. A contract of guarantee must satisfy all the essential elements of a contract. (For example, the object