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Guarantee
 

Guarantee

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    Guarantee Guarantee Presentation Transcript

    • Contract of indemnification Promises to save the other from loss caused to him by promisor or any other person Rights of indemnified:- All damages All costs All sums for any compromise For e.g. A and B go in to a shop. B says to the shopkeeper let A have the goods and he would pay for it.
    • Contract of indemnification
      • As per Indian Contract Act, indemnity should be:
      • Expressed and
      • Loss should have caused by the promisor himself or by the conduct of any other person.
      • But Indian Courts follow the English Law in case of indemnity where:
      • A contract of indemnity can be implied or expressed.
    • CONTRACT OF GUARANTEE
    • Meaning and Essentials
      • Acc to Sec 126 – It’s a Contract to perform the promise or to discharge the liability of a third person in case of his default.
      • Parties- Surety, Principal debtor, Creditor
    • Features of Guarantee
      • Concurrence
      • A person cannot become the surety without the consent of the principal debtor.
      • Primary liability in some person
      • No liability no contract of guarantee. For e.g. Time Barred debt
      • Consideration
      • Writing not necessary
      • Capacity to contract should be valid
    • Types of Guarantee (Sec 129)
      • Specific, Simple or Limited Guarantee : it extends to a single transaction.
      • For e.g.: A guarantees B that C would make payment of Rs.10,000 for the deliver of 10 pairs of shoes on 20 th Sep. After the completion of obligations the guarantee would be discharged.
      • Continuing Guarantee : It extends to series of transactions. For e.g. A guarantees B for all the payments that the C would make to B for the delivery of shoes.
    • Types of Guarantee (Sec 129)
      • Revocation of Continuing Guarantee :
      • By Notice of Revocation (Sec 130)
      • By Death of Surety. (Sec 131)
    • Nature and Extent of Surety’s Liability.
      • Liability of Surety is secondary
      • It is coextensive with that of the principle debtor- all costs (sec 128)
      • i.e. Quantum of obligation of a surety is the same (or less than if agreed) as that of the principal debtor.
      • Liability under continuing guarantee
    • Rights of Surety
      • RIGHTS AGAINST CREDITOR :
      • To insist the creditor to sue the principal debtor, but surety will have to indemnify the creditor for any expenses or loss resulting therefrom.
      • Right to set – off.
      • Right of Subrogation (Sec 140)
      • Surety getting rights of principal debtor after the payment of the guaranteed debt.
      • RIGHT AGAINST PRINCIPAL DEBTOR
      • Right to Indemnity (Sec 145)
      • Right to be relieved of liability
      • RIGHT AGAINST CO – SURETIES
      • Co – Sureties to contribute equally.
      • Liability of Co – Sureties bond in different sums.
    • DISCHARGE OF SURETY
      • Revocation by Novation
      • Variance in terms of contract (M.S. Anirudhun V. Thomco’s Bank Ltd.)
      • Release or Discharge of principal debtor.
      • Composition, Extension of time and Promise not to sue.
      • Failure on part of some other persons to join as co – sureties.
    • DISCHARGE OF SURETY
      • Guarantee obtained by misrepresentation
      • Guarantee obtained by concealment.