Section 124 to 130 contract act

 Chapter 8

Of indemnity and guarantee 

Section 124."contract of indemnity"defined -----

A contact by which on party promise to save the other from loss caused to him by the contract of the promisor himself or by the contact of any other person 

Is called a contract of indemnity

Illustrations 

1.a contract to indemnity B against the consequences of any proceedings which c may take against b in respect of a   certain sum of 200 rupees .this is a contract of indemnity 

Important facts 

1.all the insurance policy is known as contract of indemnity except for life insurance and individual accident insurance .the promise of defendant is absolute 

 Case name 

The new India insurance company limited versus state trading corporation of India 

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Section 125 -------Right of indemnity holder when sued ----

The promise in a contract of indemnity acting within the scope of his authority ,is entitled to recover from the promisor ---

1.all damages which may be compelled to pay in any suit in respect of any matter to which the promise to indemnity applies 

2.all costs which he may be compelled to pay in any suit if ,in  bringing or defending it ,he did not contravene the orders of the promisor and acted as it would have been prudent for him to act in the absence of any contract of indemnity or if the promisor authorised him to bring or defend the suit .

3.all sums which he may have paid under the terms of any compromise of any suit .if the compromise was not contrary to the orders of the promisor and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity or if the promisor authorised him to compromise the suit 

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Section 126.contract of guarantee surety,principal debtor and creditor ----a contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of his default the person who gives the guarantee is called the surety the person in respect of whose default the guarantee is given is called the principal debtor and the person to whom the guarantee is given is called the.  Creditor .a guarantee may be either oral or written .

Important points

1.if debtor is not paid debt of a bank then such debt can be taken from bank account of guaranter 

Case name .

L Narhari singh versus state of Manipur 

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Section 127-----any thing done or any promise made for the benefit of the principal debtor may be a sufficient consideration to the surety for giving the guarantee 

Illustrations 

A.B requests A to sell and deliver to him goods on credit .A agrees to do so ,provided c will guarantee  the payment of the price of the goods .c promise to guarantee the payment in consideration of A 's promise to deliver the goods .this is a sufficient consideration for c 's promise 

B.A sells and delivers goods to B.c afterwards requests A to forbearer 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 .a agrees to forbearer as requested  .this is sufficient consideration for c promise 

C.A sells and delivers goods to B.c afterwards without consideraton agrees to pay for them in default of B .this agreement is void 

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