This document discusses indemnity and guarantee contracts. It provides details on: 1) Indemnity contracts involve two parties - the indemnifier promises to compensate the indemnity holder for any losses or damages incurred. Guarantee contracts involve three parties - the creditor, principal debtor, and surety. 2) In a guarantee, the surety promises the creditor to discharge the liability of the principal debtor if they default. The principal debtor provides consideration to the surety by agreeing to reimburse them. 3) A continuing guarantee covers an ongoing or recurring series of transactions between the creditor and principal debtor. It remains in force until revoked by notice from the surety to the creditor.

1. Indemnity and Guarantee

2. 124-125 Indemnity( only 2 parties contract)
Indemnity:
Indemnifier
Indemnity
holder

3. 124 Indemnity
Losses
indemnify
Promises
himself
Conduct of
other person

4. 125
Right of
Indemnity
Holder
Damages
Cost for
proceeding
Sum incurred for
( compromise )

5. 126-147 Guarantee: 3 parties contract
Creditor
Surety( competent)
Perform promise
Discharge liablity
P. Debtor

6. Now who will later pay to surety?
• Principal Debtor will pay later to surety
• Therefore is a consideration u/s 127- Benefits (creditor to PD)which
PD has is consideration for the Surety.
• If PD paid to Creditor, u/s 128 liability same as PD and not continue
after paid by PD. , therefore it is coextensive to PD
• Loan – to become surety, or who is wellwisher.

7. 129 -131
• 129 – Continuing Guarantee- series of transactions
• A asked B to give sugar to C.
• A-----B-------C
10kgs( C pays)
5kgs( C pays)
7kgs( C pays)
10kgs if C not able to pay then A will pay

8. Revocation of Continuing Guarantee
• 130
• By notice- from surety to
creditor
• 131
• Surety dies – CG ends over here

9. Invalid Guarantee
Invalid Guarantee
142 – if
misrepresentation
done for Guarantee
143- concealment of
fact
144-if co-surety
condition placed
unless that co surety
joins

10. Surety : when can be discharged/ can’t be
discharged?
• When he gets discharged from
liablity?
• 133 variance in terms of contract, PD
AND C changed terms of Contract,
therefore now Surety not liable
• 134 PD discharged now Surety not
liable.
• 135 C says that
• he is compounding or
• gives time to PD, or
• not going to sue P
• 139- C – act or omission –
inconsistent to the right of surety
• When he doesnot get discharged
from liablity?
• 136- if Creditor has contracted with
some 3rd person that he will not
sue PD
• 137 cant be discharged on mere
forbearance
• 138- many co- sureties doesnot
mean all the sureties are
discharged
• Rights of co-sureties: equal
contribution/s 146 or
• 147 Contribution according to
respective obligation.

11. Rights of Surety
• 140- PD fails to pay C , surety takes place of C for PD now. Surety steps
in the shoes of C for PD( Rule of Subrogation)
• 141- Rights of creditor will come to surety. Benefit of Creditor’s
security that PD gave to him will come now to surety.
• 145 Who will pay to surety?
PD will pay to surety, indemnity from PD.