Contracts II Unit I

Sec. 124 of the ICA defines-

• Indemnity

• Bailment

• Guarantee

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_________”.

English law of indemnity is wider in scope. Briefly justify.

Which of the following is not a right of the indemnity holder, in relation to the promise of indemnity ?

• right to recover all damages

• right to recover all costs and expenses

• right to recover all sums incurred in relation to a compromise

A sells and delivers goods to B. C afterwards requests A to forbear to sue B for the debt for a year, and promises that, if he does so, C will pay for them in default of payment by B. Is this a valid contract ?

• No, this guarantee contract lacks consideration

• Yes, forbearance is sufficient consideration

• No, the consideration is inadequate

The first principle governing surety's liability is that it is ___________ with that of the principal debtor.

Bank of Bihar Ltd. v. Damodar Prasad is landmark for -

• Guarantee contract where minor is the PD is void

• Exhaustion of remedies against the PD is not necessary

• It is a prerogative of the creditor alone whether he would move against the principal debtor first or surety

• Difference between guarantee and indemnity contract

A guarantees payment to B, a tea-dealer, to the amount of Rs. 1000, for any tea he may from time to time supply to C. B supplies C with tea to above the value of Rs. 1000, and C pays B for it. Afterwards, B supplies C with tea to the value of Rs. 2000. C fails to pay. Decide the liability.

A, in consideration that B will employ C in collecting the rent of B’s zamindari, promises B to be responsible, to the amount of 5,000 rupees, for the due collection and payment by C of those rents. This is an illustration for-

• Sec. 126

• Sec. 129

• Sec. 127

• Sec. 125

Choose the correct statements-

• A continuing guarantee may at any time be revoked by the surety, as to future transactions

  
  

• A continuing guarantee must be revoked by notice to the creditor

• A continuing guarantee may not be revoked

• The death of the surety operates, as a revocation of a continuing guarantee, so far as regards future transactions.