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Law of indemnity guarantee

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Law of Indemnity and Guarantee

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Law of indemnity guarantee

  1. 1. GROUP NO. 5 PRESENTS.. LAW OF INDEMNITY AND GUARANTEE
  2. 2. PRESENTED BY 1. Sneha Chouhan (21) 2. Vijaya Darne (23) 3. Alpita Dharshnia(25) 4. Mayank Dubbey(27) 5. Triveni Dunna(29)
  3. 3. CONTENTS 1. Introduction to business law 2. History 3. Law of indemnity 4. law of guarantee 5. conclusion
  4. 4. 1. Introduction to business law • Business law encompasses all of the laws that dictate how to form and run a business. • Business Law is a body of principles which are framed by the state in the administration of justice • This includes all of the laws that govern how to start, buy, manage and close or sell any type of business.
  5. 5. • Business laws establish the rules that all businesses should follow. • It is a code of conduct. • It deals with rights and obligations of Business persons with their rights and obligations arising out of business transactions. It encompasses various aspects of Law and business like Laws on contracts, Companies, partnership, Insurance, Sale of goods, corporate relations, Negotiable instruments etc
  6. 6. 2. History • The Indian Contract Act 1872 sections 1- 75 came into force on 1 September 1872. It applies to the whole of India except the state of Jammu and Kashmir • Indian Contract Act, 1872 is the main source of law regulating contracts in Indian law, as subsequently amended.
  7. 7. HISTORY….. (CONTD) • It determines the circumstances in which promise made by the parties to a contract shall be legally binding on them. All of us enter into a number of contracts everyday knowingly or unknowingly. Each contract creates some right and duties upon the contracting parties. Indian contract deals with the enforcement of these rights and duties upon the parties.
  8. 8. 3. Law of indemnity Definition: SEC. 124- A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a “Contract of Indemnity”. E. g. A car insurance policy
  9. 9. • The person who promises to save the other from loss is called indemnifier. • The person whose loss is to be made good is called indemnified or indemnity holder
  10. 10. FEATURES  TWO parties- Indemnity holder Indemnifier  Sec. 10- essentials should be satisfied  All insurance contracts are contracts of indemnity except life insurance.
  11. 11. RIGHTS OF INDEMNITY HOLDER o To claim damages o To claim costs o Other payments
  12. 12. Example- • The receipt pertaining to certain goods is lost B while travelling through Indian Railways. Now, A claims the goods from Railway company. The Railway Co. asked A to give an ‘indemnity bond’. A gets the goods. Here A is indemnifier and Railway Co is the indemnity holder. Later, B the real owner sues the Railway Co.. Now, the co. can claim indemnity from A, for the loss caused by his conduct.
  13. 13. 4. LAW OF GUARANTEE • “A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default.” • Eg- ‘A’ advances a loan of Rs 5000 to ‘B’ and ‘C’ promises to A that if ‘B’ doesn’t repay the loan, ‘C’ will do so. This is a contract of guarantee.
  14. 14. FEATURES • Valid Contract ( essentials of Sec-10) • Consideration for surety is loan given by creditor. • Liability arises immediately when debtor makes default. • Implied Indemnity • Right Of Subrogation • Disclosure of Facts • Form- Oral or Written • Existence of Principal Debt.
  15. 15. KINDS OF GUARANTEE • Specific • Continuing
  16. 16. Revocation of Continuing Guarantee By notice By Death of Surety By other modes : Alteration without consent Discharge of Debtor
  17. 17. 5. Conclusion Difference b/w Indemnity & Guarantee Basis Indemnity Guarantee Meaning A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a “Contract of Indemnity”. A “Contract of Guarantee” is a contract to perform the promise, or discharge the liability, of a third person in case of his default. Section 124 126 No. of Parties 2 3 No. of Contracts 1 3 Nature of Liability Primary Secondary
  18. 18. Difference b/w Indemnity & Guarantee Basis Indemnity Guarantee Object Compensation of loss Relief to Debtor Existence of Liability Not necessary Necessary Interest No real interest Real interest for surety Consideration Consideration is present No consideration for surety or SUFFICIENT consideration for surety in the form of loan given to the debtor.

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