Contract II 

 


Indian Contract Act 1872 ( Sec 124 – 238 )

 

1. INDEMNITY & GUARANTEE ( Ss. 124 – 147 )

     

Sec 124 – Deals with Express Contracts of Indemnity

 

Sec 125 – Defines Contract of Indemnity & Rights of Indemnity - holder


Indemnity means security against or exemption from legal liability for one's actions.


Example : A Contracts to Idemnity B against the consequences of any proceedings which C may take against B in respect of a certain sum of Rs.1000/- 

 

Person who gives the indemnity is called – Indemnifier or Promisor


Person for whose protection, the indemnity is given is called – Indemnifier holder/Promisee

 

kinds of Indemnity – Express Contract & Implied Contract



Express Offer: This is an offer accomplished through words that can be written or oral. Oral offers may be conducted over the telephone or in person.    


Implied Offer: This is an offer conducted through sign or acting. However, if         the opposite party remains silent over the offer, the offer itself is not valid.

 

The Contract of Indemnity is an Actionable Claim

 

Sec 126 defines – Contract of Guarantee, Surety, Principal Debtor, Creditor

 

Creditor – Person to whom the guarantee is given

 

Principal Debtor – Person in respect of whose default the guarantee is given

 

Surety – Person who gives the guarantee

 

Tripartite Agreement – Contract of guarantee

 

A contract of Guarantee is a collateral agreement to perform or discharge the liability of a third person in case of his default

 

Sec 128 – Surety Liability – Is co-extensive (means equally extending)

with that of principal debtor, unless it is otherwise provided by the contract.

Surety’s liability cannot be extinguished by the death of the principal

Minor cannot be held liable for surety

 

Sec 129 – Defines Continue Guarantee

 

Sec 130 & 131 – Revocation of Continuing Guarantee

 

Sec 130 – 139 – Discharge of Surety


·       Revocation By Surety(sec-130)

·      Death of Surety(sec-131)

·      Variance in terms of Contract(sec-133)

·      Release or discharge of Principal Debtor(sec-134)

·      Compounding by Creditor with Principal Debtor(sec-135)

·      Creditors act or omission impairing surety’s eventual remedy(sec-139)

·      Loss of Security(sec-141)

·      Guarantee obtained by misrepresentation(sec-142)

·      Guarantee obtained by concealment(sec-143)

·      Failure of a co-surety to join a surety(sec-144)

·      Failure of consideration

 

 

 

When Contract of Guarantee be Revoked ?

 

Sec 142 - Contract of Guarantee is based on the principle of misrepresentation 

 

Sec 143 - Guarantee becomes invalid if the guarantee is obtained by concealment