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WorksheetsContracts II Unit I
Total questions: 20
Worksheet time: 30mins
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 (a) ”.
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 (a) 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.
Durga Piya v. Durga Pada, 1927: if surety dies, the continuing guarantee regarding future transaction will stand revoked. But if there is any contract to the contrary the surety will not be discharged from his liability.
True
False
Which of the following is illustrative of discharge of Surety due to variance in the terms of the contract ?
Loan repayment scheduled for a period of 5 months is unilaterally extended and also a new schedule is accepted for repayment by the Creditor, on the consent of only one guarantor
A gives to C a continuing guarantee to the extent of 3,000 rupees for any oil supplied by C to B on credit. Afterwards B becomes embarrassed, and, without the knowledge of A, B and C contract that C shall continue to supply B with oil for ready money, and that the payments shall be applied to the then, existing debts between B and C.
Where the payment of rent was guaranteed, the rent was increased without the consent of the surety
Surety handed over the letter of Guarantee of Rs. 25,000 to the PD, the Creditor got it reduced to Rs.20,000- altered by the PD, without consent of Surety
Differences between indemnity and guarantee
What is the basis for Section 134, ICA?- Discharge of surety by release or discharge of principal debtor
Illustrate "act or omission" U/ Sec. 134, ICA
A contracts with B to grow a crop of indigo on A’s land and to deliver it to B at a fixed rate, and C guarantees A’s performance of this contract. B diverts a stream of water which is necessary for the irrigation of A’s land and thereby prevents him from raising the indigo. C claims he is no longer liable on his guarantee.
C is discharged from liability
C is not discharged from liability
The following are rights of the Surety-
right to securities
right of indemnity
right of subrogation
right not to be sued before the PD
A guarantees to C payment for iron to be supplied by him to B to the amount of 2,000 tons. B and C have privately agreed that B should pay five rupees per ton beyond the market price, such excess to be applied in liquidation of an old debt. This agreement is concealed from A. Is A is liable as a surety ?
In every contract of guarantee there is an (a) promise by the principal debtor to indemnify the surety
Briefly explain Sec. 146
