9

The Indian Contract Act, 1872: Indemnity and Guarantee

Learning Objectives

After reading this chapter, you will be able to understand:

  • Meaning of a contract of indemnity and contract of guarantee
  • Rights of an indemnity holder
  • Difference between a contract of indemnity and a contract of guarantee
  • Different types of guarantees
  • Right of surety
9.1 INDEMNITY CONTRACT

A contract of indemnity is a special contract. All the general principles of the contract are equally applicable to it.

The contract by which one party promises to save the other from the 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’— Section 124.

The person who promises to make good the loss ...

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