Indian Contract Act: Contract of Indemnity

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What is a 'contract of guarantee'?

A contract between a creditor and a principal debtor

A contract between a creditor and a surety

A contract between a principal debtor and a surety

A contract to perform the promise or discharge the liability of a third person in case of default (correct)

Who is the 'principal debtor' in a contract of guarantee?

The person who gives the guarantee

The person to whom the guarantee is given

The person in respect of whose default the guarantee is given (correct)

The person who benefits from the guarantee

What is a 'continuing guarantee'?

A guarantee that covers a transaction with a specific value

A guarantee that covers a single transaction

A guarantee that covers multiple transactions over a period of time (correct)

A guarantee that covers a transaction with a specific time frame

How can a surety be considered liable in a contract of guarantee?

Only if the principal debtor has defaulted, regardless of any written agreement Signup and view all the answers

What is the extent of the surety's liability in a contract of guarantee?

The surety is liable for the entire obligation of the principal debtor, unless otherwise stated in the contract Signup and view all the answers

What can serve as a consideration for a guarantee?

Anything done or promised for the benefit of the principal debtor Signup and view all the answers

What is a contract of indemnity?

A contract where one party promises to save the other from loss caused by the promisor himself Signup and view all the answers

What is the promisee entitled to recover from the promisor in a contract of indemnity?

All of the above Signup and view all the answers

What does the promisee need to do to recover costs in a contract of indemnity?

The promisee needs to act as it would have been prudent for him to act in the absence of any contract of indemnity Signup and view all the answers

What is the illustration given in the text about a contract of indemnity?

A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees Signup and view all the answers

What happens if the promisee in a contract of indemnity acts against the orders of the promisor?

The promisee is not entitled to recover from the promisor Signup and view all the answers

What does the promisee need to do to recover sums paid under the terms of any compromise of any such suit in a contract of indemnity?

The compromise should not be contrary to the orders of the promisor and should be one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorized him to compromise the suit Signup and view all the answers