'd am a~ s.

I
l& gn ev ed p%·
CHAPTER
INDEMNITY AND
GUARANTEE

1NTRODUCTION
m ni ty an d gu ar an te e ar e a species of the general
Contracts of in de th e general law of contract ar
e
, th e pr in ci pl es of
contract As su ch pr in ci pl es relating ·to th em are
. Th e sp ec ia l
ap pl i~ le _to th em 4- 14 7) of the Indian Contract
te r V II (S ec : 12
cont.amed ID ch ap
Act, 1872, an d ar e di sc us
as
se d fallows.

CONTRACT OF INDEMNITY
r from
ct by w hi ch on e pa rty promises to save the othe
A contra t of the promisor himself,
a lo.ss caused to hi m by th e co nd uc
is called a 'Contract of
t of an y ot he r pe rs on ,
or by the co nd uc od
ec . 12 4) . Th e pe rs on who promises to ·make go
. Indemnity ' (S .
d th e in de m ni fie r ·(p ro m isor), and the person whose
the Joss is calle th e in de m nified or indemnity
od is ca lle d
Joss is to be made go of in de ~n ity is really -a class· of
e) . A co nt ra ct
holder (promise
contingent contracts.
Example
m nify JJ agains t the conse~uences of any
' contracts to in de
ay _ ta ke ag ains t ~, in re spect of a certain ·
P,oceedings which C m
II.Un of f 200. This is a co
ntract of indemnity,
 l n,l"rnni1
12.2 ~ U11 !<i tlf'l'I!< 111111 Cm ·p ornlr f ,ow ~ '1.
r) a,!tween Sand P, there is a
A con tract ofind cmnit y m ay b e ex pressed oi- impl~cd . An itnpliecl (,., S . h contract 1
in case pay~ ,~ ~ e event of a defau\
contract of indemnity may b e inferred from the c1rcumslances of is not expresse etween the partiec,,,
tJ1c ca.se, or fro m tl1e relationship of the parti es.
Example £S•entlal Features of a Contract
A, o n the instruction of T, sold certain cattle b~longing to O. o
made A liable for it., and recovered damages from him for selling C
it Held, A could recover the loss from T as a promise by T to A
from anY. such loss would be implied from his conduct in asking
A to sell the cattle.

CONTRACT OF GUARANTEE
Contract o1

' A contract of guarantee i~ a contract to perform the promise, or

discharge the liability of a third person in case of his default. The
Guarantee
(Essentials)
person who gives the guarantee is called the 'surety'; the person
in respect of whose default the guarantee is giv.en is called the
'principal debtor'; and the person to whom the guarantee is given
is called the 'creditor'. A guarantee may be either o~al or written
(Sec. 126). It may be expressed or implied and rriay even be
inferred from the course of conduct of the parties concerned.
S, P, and C unless otherwise stated, in the following pages of
this chapter, stand for surety, principle debtor~'·and creditor. · Fig. 12.1 Essential Features o
Examples
Consent of three parties The
(a) Srequests Cto lend f 500 to Pand guarantees that if Pfails to the concurrence of all the three ]
pay the amount, he will pay. ·This is a contract of.guarantee. debtor, the creditor and the suret)
S, in this case is the surety, C, the creditor and P, the principal
debtor. · Primary llablllty In some pe~
(b) Sand P go into a shop. S says to the shopkeeper, C, "Let liability in some person other thai
P have the goods, and if he does not pay, I will." This is a used in the definition of guarl
contract of guarantee, the primary liability being with P, and enforceable by law.
.
the secondary liability with S. "' . .

· "°mlse to pay must be

A contract of guarantee. is a tripartite agreement which requirement of a contract of g]
contemplates the principal debtor P, the creditor C, and the surety
S. In it, there is a triangular relationship in which the following conditional promise to be liab~
may be distinguished. .
debtor. It implies that the liab ·
three collateral contracts -
~ en the principal debtor ma.K
(a) Between C and P, there is a contract out of which the
guaranteed debt arises. ~ /Implied guarante~
(b) Between Sand C, there is a contract by which Sguarantees to tlthet oral or in Ho1
writing.
~ guarantee shall be in
pay Pk debt in case of his (P~) default. wri ·
. -
I
 ,... ,,...
nn d /> 11 ''"' , ""' ' c' "'"""'""' ..,,• t 2.3
ld Hr t" rcn S,,y!
in (' fl~( ' ,5p ! . • w, Ph u 1 cO
is nn t l'XJ) _' , 1tl tlw <'V< •nt of n 11u t lhat /' ~h·,11 .""'""•r11f y S
, I rss rd b<.'h"'l'<' a dd,1\11( I, /' '. . • flfll r,H I ,r It
" lh(' pa, ti(' " i~ yI . 1111 , C
atures of ' . o way~ irn pl,r d . '
Essentlal Fe
a Co ntr ac t of Guaranteo
-
Consent of .....

'
- ......
three
par ties

...,
- Primary ""
liability in
'--some person

Co ntra ct of Promise to ""

Gu ara nte e pay must be
... (Es sen tial s) conditional
..,

- "
Express/
Implied
gu~rantee

Essentials of""

-- valid
contract

act of Guarantee
Fig. 12. 1 Essential Features of a Contr
ntr act of an ee requires gu ar. t •
tees that ifPfails Consent of three parties Th e co · al
· c1p
s to it, viz ., th e pnn
tract o f ~ the co nc urr en ce of all the three partie · ·
d P, the principal debtor, the cre dit or an d the surety.
ary I/a bi lit y In some pe rso n There must be a primary
Prim
surety. The wo rd 'liability'
pkeeper, l; "lit liability in so me pe rso n oth er than the
the de fin itio n of gu ara nte e me ans a liability which is
used in
r
I will." This iu
eing with P, and enforceable by law.
·

nal An important
Promise to pay must be condeitio is that there must be a
eement whicb requirement of a contract of guarante
na l pro mi se to be liable on the de fault of the principal's
conditio
~ and the suretY r. It im pli es tha t the liability of the surety should arise only
debto
the foUowiDI when the principal debtor makes a de
fault. ·

s/ p/led gu ar an tee A co ntrac t of guarantee may be

of which tbt Expres /m
glish Law requires that
ora l or in wr itin g. llo we ve r, the En
either
ara nte e shall be in wr itin g an d be signe~ by the ~a ran tor.
the gu
•
 12.4 ~ Bni, . it11•~!' und CnrpotAI~ 1.Aw~

E~ehtlals of a va~ld con.tract A conlract of guarantee 11111 !il

sallsfy all the c-ssential r~qmrc111cnts of u valid t,ontracl.

The contraet o~ guarantee must be made by the pat'tlos

competent to -contract All the parties must be cupablc of
entering into a v~lid contra.ct, thbugh the principal debtor may
be a person suffenng from an incapacity to contract.
The contract of guarantee must ·be supported by
consideration Consideration received by the principal debtor
is sufficient for the surety, and it is not" necessary that it must
necessarily result in some benefit to the surety hin1self.

Extent of Surety's _Liability ·

s,,Nature of surety's liability It is _co-extensive. Sec. 128 of the
Indian Contract Act deals with the nature of the surety's liability.
Th,e liability of the surety is co-extensive with that of the principal
debtor, unless it is otherwise pr_o vided by the contract. In other
words, the quantum of obligation of a surety is the same as that of
the princ~pal debtor, unless,.
there
.
is a contract to the contrary.
. (

Example ·
· .s·guarantees to C the payment of a bill of exchange by P, the
acceptor. The bill is dishonoured by P. Sis lia~le not only for the
amount -0f the bill, but also , for any interest and charges which
may have becoine due on it' . · .
. :- Umltcttlon of s~rety's liability Although the liability of
.·. the surety is co-e~tensive with th.a t of the principal debtor, he
._ :.·may fu,nit his liability, In this conn~ction, difference between a
~ ·: . ., : guarantee fur a part of the entire debt, and a ~arantee for the
h.:· 'd~-bt_·m~ec.
·_. ··, ..·; .- e~~e f.-.. 1·11n;1..ma.y
b' ·- t. .~a 't · · b .. en· ot__ ed.,
' ' .' - . . ~

f Example ' / •' '' , ·, ' . : ' ';' / . .. I .

P owes C l 8,000 on .a·continuing guarante~· given by S. S may

have giveri this guarantee in eitlu!,t of the fqllowing two fonus:
(a) I ·'guarantee . the · paymept ~-f ·: .the . de~t :~( , .· :5,000 by
Pto C. . . .
(b) I guarantee -'the · payment: ·Pf' ~ny , ;im9unt._ lerit,·.by . C to
Psubject to a limit of.f 5,000, . : .. _. _.. ,. .:, .
. ' .
·.' . ' .' ·• '
• I
.~ .....
 KIND S OF GUA RAN T·EE
Guar antPe may be class ified cl
. un er t.h c follow in g two categories.
Specific Gua rant ee
A guarantee which extends to a sing. 1 d b
e tor a·rspeci
• all d a speci·fi c guarantee. The eliabiJ fic transaction
is c e ··t h
1 Y o t e surety come s
d h th duly distharged or the
to an. en. wd 1en e guaranteed debt is
promise 1s u y performed. For examP e, X guarantees payment
1
· O f th by Y to
of the pnce . e five_ bags of flour to Y to be delivered
d
Zan d to be pai for 111 _a ?1onth: .Y delivers the five bags ·to
Z,
X
and Z pays for them . This 1s a contract of specific guarantee as·
five
intends to guar ante e only the paym ent of the price of the first
ld
bags of flour to be de liver ed at a time . This decision was uphe
in Kay Vs. Grov es. ·

Continuing Gua rant ee ,

s of
Cont inuin g guar ante e is that .whic h exten ds to a serie
n or
transactions (Sec.129); it is not conf ined to a single transactio
h
debt The liabi lity of the sure ty exte nds to all transactions whi~
g can
have been mad e: The fact that the guar ante e is cont inuin
also be asce rtain ed from the inten tions of the parties, and the
that
surroundif;lg circu msta nces . For e;xample, A, in cons idera tion
Bwi ll emp loy Gin colle cting the rent of B's,.h ouse , prom ises Bto
and
be resp onsi ble to an amo unt oft 1000 for the colle ction due
-
paym ent by .C of the rents . This is ~ cont inuin g guar ante e.
of on
The func tion of a cont ract of guar ante e is to enab le a pers
e may
to get a loan, good s on cred it, or emp loym ent. A guar ante
ja there fore be give n for: ' I
·
• •
f
I. The repa yme nt of a debt , or
. I

2. The paym ent of the pric e of good s sold _Oll; cred it, or
·3. The goo d cond uct or hopesty of a person employed in
a part icula r office. In this case, the guarantee is calle~. a
'fidelity' guarantee. ,
· · . A guarantee may be given for an exi~ting, or afuture qebt o.r
obligation. In the fomier case; it is called 'retro~pective' guarantee,
1

.,.
\
and in the latter case,. fprospective' guarantee.
A guarantee may be in respect of a single transaction or in
(
f' respect of a number of transactions. .·
 RIGHfS OF SURETY
h.l~ 1·i~hh -{\~i\lH~t :
.\ ~t\l'\'t,\ '

I. 1ht" rrt:"1.htor
:J. 1ht" ptindpn l dt'htnr, nnd
3. -tlw C\>,.Sut't'tic~t. ·

Rights agatnat Cr-editor

(1) Before 11aynu·nt of tl1c guaranteed debt A surety may; after
the guarn11h."Nl debt hns becol'l'le due and before he is ca1led
upon t<., pay, 1·equire the creditor to sue the principa l debtor.
I h.,wevrr, the surety shall have to indemn ify the creditor for
any expense or loss resulting there from. In case of a fidelity
guarnntrt~, the surety can ask tJ1e employ er to dismiss the
e1nployce in the event of his proven dishonesty.
fl) Right of s~t-off On being sued by the creditor , the surety
can rely on any set-off or counter claim which the debtor
has against the creditor.
(3) On payment of the guaranteed debt The surety is '
subrogated to· all the rights of the creditor and gets . the
right t.o demand from the creditor at the time of paymen t
all the security which they have received before, at, or after
the creation of the guarantee (Sec. 141). The right e~ists
irrespective of the fact whether the surety know~ of the
existence of the securities or not. For example, C advanc es
to P, his tenant, , 2,000 on the guarantee of S. Chas a further
security for the , 2,000 by a mortgage of .P~ furniture.
C cane.els the mortgage. P becomes insolvent, and C ·sues
Son his gu.aran.tce. Sis discharged from the liability to the
amount of the value of the furniture.
(4) Right to equldca On the payment of the guaranteed debt,
·, tbe $U.rety is entitled t<? all equiti_es .which ~1e credit~r could
. havt enforced not only against the principal ~ebtor hin1self,
but aJ.so·against perso~a daJming through him.
(5) Right of ,ubroptioa Under.Sec., 140 ~f the Act, when a
guaranteed debt haa bee(>~(' due. and lhc surety ha.a paid
~ ~e amou11t ~e it liable for, hels v~sted with all the·rigbts
which the ~reddor Jw against the. principal debtor. This
mean~. on the payment of the ·guaranteed debt, the $Urety
. steps into the aboes of the cr~ditor, , · ·
 11111,, , 1111 ,. , v At11I ( '

Rights aga ins t p 1nc fpnl Dob tor · ' ""'" "'''" ~ 12 .-,
r
A s u r<' l)' has the folio"v1ng. .
• nght s a . .
principal dc-btor
(I) Rig ht Co be reli eved fi 1 R•Hnst the h ·
and p l"rsu a d c 111s . ron llabi1ity T c sure ty can insis t
. .. pri ncip al d b
h irn from the
hab1hty by payi ng off th e deb t en to~ to relieve
so onl y after the
deb t has bec ome due. Onc e. ut l ~ c~n c..l o
accr ues as a fix ed sum tl1e sure th e pnn c1pa l deb tor's liabi lity
. firom th e hab1 . .1ity. , ty can as·k h'1m to exo nerate
h im
' ' ·
(2) Rig htto ind cmn ity A s d iscu ssed earl·ier, th eter m 'ind emn ity'
mea ns com pen sati on · I n eve ry con trac t 0 f
· 1· · . . gua rant ee, ther e is
an imp 1ed pro mis e by th
to inde mni fy the
sure ty; and the sure ty is e e pnn cipa l deb tor
from the prin cipa l
deb tor, all pay men ts pro ;::e d to ~ec ove r
pay men t und er th Y ma e. Afte r the sure ty mak es
· · al d b He gua rant ee, he bec ome s a cred itor of the
pnn c1p e tor· . e is enti tl e d t O reco ver from the deb tor
all th e amo unt incl udi ng inte rest H owe ver, th e amo unt
. !

wro ngful l Y pa.i ~ can not be reco vere d.

Rights aga ins t Co-sureties .

sureties. They
Sometimes a debt. is guaranteed by two or more
contribute, as
are called co-sureties. The co-sureties are liable to
debt. When one
agreed, towards the pay me nt of the guaranteed
, he has a right
of the co-sureties makes pay men t to the creditor
to claim contribution from the oth er co-suret
y or co-sureties. The
the sureties are
principle of equal contribution applies whether
ility is under ·the
liable join tly or severally, and whether their liab
same con trac t / different con.tract. .
t Act provides
(1) Right to contribution . Sec. 146.of the Contrac
tha t wh en the re are two or mo re co-sureties for
the same debt
a default, the
or dut y and the principal deb tor has committed
c~ntrary, are
co-sureties, in the abs enc e of any contract to the
default.
liable to con trib ute equ ally to the ext ent of the
. . 147 of the.
(2) Co-sureties bou nd in different sums Sec
have agreed
Contract Act pro vid es tha t when the co-sureties
to gua ran tee different sums, they have to con
tribute equally
teed by each ·
subject to the ma xim um of ~e-am oun t guaran
it ascertained
one. In oth er words, within the ma xim um lim
ute an equal ·
by the co-sureties, the y are liable to contrib
sureti~s are
amount. Ho we ver , in the English Law, the co•
t gua r~t eed
liable to con trib ute in pro por tion to the am oun
 J 2 .8 ~ H"'"" '" 4 nu,f I n r l'"tlt f r I '"' •

<o
h _,· C':1,h ~m-r l) . In the lndiA.n 1 ,Hw. l wh-\.4'{'1\ 11 1('
qHlf•t i('~
•
the-,'<' i'I <'q11AJ11y nf hurd <'n And l)('n dit.

DIS CHA RGE OF SUR'ETY

A ·sul"{'ty js ~aid h..) be disch a rg<'d w h C'n his liability com es t 0 an
<'n d .

j ~Odes of Discharge of Surety J

I
(A) By Revocation
I

By Notice ;
By Death of Surety

By Nova tion

,..

(8) By Invalidation of Contracts

Guarantee Obta ined by Guar antee Obta ined

Misre prese ntatio n by Conc ealm ent

.
Failu re of Co-s urety to
Joint Sulety

'
(C) By Conduct of Creditors

Release I DifiCharge of
Variance in Terms of Contract Principal Debtor
'
.

AmJngement between Principal Creditor's Act/ Omission

Debtor and Creditor Impairing Surety's Remedy

.
LolS of Security .
-
Fig. 12.2 Modes of Discharge of Surety
 I utl1 •11111 i 1 Y 11 111 I f ,. 11 ntn 11l 1•r ~ 12 .9

Di sc ha rg e of Su re ty bY Rov oc nt lon
(a) No tk't' of rcvo ..·aH on A
11 t n tr
· • l 1 <'<' m a y IJP rev oke d l,y giv i 0
' ' ~u •u··
a nol l<.' t' of rcv ocu t I· OJl , 'l') I<' ]h i 11'l't
' 1 Y ro m c•s l o nn r nd o n th e
h o n of th e gru • . •
ll' \ oca a1u 11tl 'c A f;.J>l'l 'I'fiIC E,'1.mrn nl cc can no t b e
rcv o k C'd by the su1·nt ·r ·1 .
. '-· y I t l C ] ' h'l1 '1ty }1a~ alr ead y acc rne <l . A
co ntinu ing gru arant C'e may ·atma r l rev oked l,y the
fut ure L
t . ny un c JC
su ret y, as to cre dit or.
· ral~l Sac tto ns, by not.ice to the
But the sure ty re-m a ms 1able to r ran sac ~1on s alr ead y ent ere d
t
iJ1 to. .
(b) Re vo ca tio n by de athar Th e deatl~ of the surety operates as a
rev oc ati on of the continuing
gu ara nte e It gu antee only m respect of the in respect
· me an s lha t rev,ocatio n is effective only
o f fiu t ure transactions. ·
by n ov au· on (S cc. 62) Novation me an s
(c) Rebvo.ca tio . n
sti tut ion of a ne w co ntr act of guarantee for an old on e
s~ . s,
. ferent partie
eit he r be tw ee n . thP- same pa rt·1es or b etween dif
.
contract being ·the mutual
~e co de rat ion - for the new
nsi
Th e original co ntr act of
dis ch arg e of the old contract.
an end.
gu ara nte e in suc h a case co me s to
uct of th e Creditor
Disc~arge of Surety by the Cond
I'
tract If the cre dit or makes an y
. I (a) By va ria nc e in ter ms of con
na tur e/t erm s of co ntr act ,
ma ter ial (significant) ch an ge in the
tho ut the co ns en t of the sur ety , the surety ·is dis ch arg ed
wi
transactions sub seq ue nt to
fro m the lia bil ity in the case of
ch an ge is no t significant
the va ria nc e. Ho we ve r, wh en the
the surety, the sur ety is no t
or is ma de for the be ne fit of
dis ch arg ed .
ipal debtor Th e sur ety is
(b) Release or discharge the princ
t be tw ee n the creditor an d the
dis ch arg ed by an y fresh co ~tr ac
Ae1819'/~ ; . nc ipa l de bto r, by wh ich the pri nc ipa l _debtor is released .
pri
.. y act or omission by ·the
Th e ~urety is also discharged by an
ich is the discharge of the
creditor, the legal consequence of wh
de bto r (Se c. 134). But the surety is no t discharged
pri nc ipa l
by the op era tio n of law.
ac t or om iss ion im pa iring surety's eventual
(c) Cred ito r's
y's re1 nedy' 1ncans
remedy The term 'imp~iring suret
uc ing the rights of a surety. Se c. 13!> of the Contract
red
ides tha t wh en the cre dit or does an
y act which is
Act prov
 MHely or omit~ to cl,, r,. , ')IJ)I ,
• •nt \\ith th~ 1i~ht11 of rlw
hu·unshh
nrt w Iurh tu hl th,, Mll't'1Y i8, ,•quln·d of him, nnd t)i,, Pv,,,1111111
n·nwdy of th,, surC'f) hims,.\lf HHa.inst tlu, pdnci pn] clc •l,111 ,. •
1

thcn·hy impain•d , rlw surc-ty ts disdanrg,·,I. )f 11w Hu,,,,y!·~

t"\'t'nh1a] l't'llll'dy i~ not impnir<•d ngnl1ist tho principal d(1\,f ()i~ a.
tht' surety is not disrharH ed . ,
(d) l.,oss of smarity by the &.'t"C"tlhor . S<'C. Ml of th,, Con I rn<·t A<t
providt:'s that wlwn tlw rn,Jit01· loses or, witJ1out the:! r onsc•in
of thl' Slll't'ty, parts with any St•curity givt'll lo him nt the lime~
of the contract of g11arantt'e, the surety is discharg ed fron 1 the
liability to the ('Xtent of the vluuc of security. If there nrc two
~r 1nore debts, ead1 st'cured by a separate security, ihc surety
for one of t11e debts is not discharged, if the creditor loses or
parts with tJ1e s~c-urity. or securities relating to other debts. In
State Bank of Saurash tra Vs. Chitranjan Ranganath Raja.,
AIR 1980 SC 1528. the Supren1c Court held that when a
bank could not take sufficient care of the goods pledged as
security, whid1 were lost, the surety was allowed to claim
discharg e .to the extent of the value of goods lost.

Discharge of Surety by lnvalldatlon of Contract

(a) Guarantee obtained by misrcprcscntadon , (Sec.
142) Any guarante e which has ~een obtained by ·n1eans
of misrepre sentation n1ade by the creditor, or with his
knowled ge and assen~ concern ing a material part of the
transacti on, is invalid.
(b) Guarantee obtained by concealment (Sec. 143) Any
guarante e which the creditor has obtained by means of
keeping silent as to material circumstances is invalid.
(c) Guarantee obtained without any consideration When
in a contract of guarante e there is a failure of consideration
between the creditor and the principal debtor, the surety is
discharged.
Cues where surety i, not diachargcd A surety is not discharged
under the following circumstances:
1. If a contract is made by the creditor to give time with a third
penon, and not with the principal debtor, the surety is not
discharged (Sec 136). . ·
 I ".t1' hm.it }. l\llt·I ( ,• 11 1H 1111t 1•r ~ , , . 11
.
:2. ~1-C:"t"<" fot ht' an, nc- p on tl
· · l t l Patt of tl w { rrd ito r tu !11 \l t• lln·
,..\() ' .
rnO ( l}M ·t (' >t or or to( ' ll1o
l
.. \11\
rrc uny c ti' wr t('I\ H.•d y l\ Ul\t l\. ~t
. j . •
'(' r.. l
<u) ('S l lOl1 It\ t lC nbs t'll( - . o ,-ll\ y }lr0 i ·I o
h
'
• , , ~ on h\ the ~U~ \.rtt nlc c tu
tl H~<'Ont1·n.ry , dis ~ha n,,c tl- su1e1 y (Se c. J:•i?).
~

, . o 1c
3. \\Then tl1cre ax c co-sur e Lil's 0 . 1 o Ly the t tl'ditor of mw
of tl1cn1 do~ s no t dis dia ··l.: / e cnsers ; nor doe s it ft r.-~ t.lu~
. 1~~ge t ,e ot·h
sut el).,. so rel eas ed ft·o Ill .
(Sec. 138). h.Y lot1,c othct· sur cH t~~
us reS J)O ll st'\ ·t·,
· · · Ji

.
When does a guarantee become 1nva 11d? A guatantc~
r 11
becomes inv ali d un de r th e 10 . . .
owing circun1sta11ces:
I If .the cre dit or . 111akes ~ •
1111Sr
•
or ton set tls lo t\.
ep1esentalion
•
n:
1sre ~re sen tat ion an d tl1e misrepresentation relates ltl n
142).
ma ten al pa rt of the transaction (Sec.
If ~e cre dit or kee ps sile nt as to the n1aterial tirc uut sta ncc s ht
2. ,
ob tai nin g gu ara nte e (Sec. 143).
on a co nlr ad lhal the
3. \V ben a sur ety gives a gu ara nte e up
the r person h~ts joht~tl
cre dit or sha ll no t act up on it unt il ano
as co-surety, an d the oth er per~on doe
s notjoin (Sec. 14-4),
tl u
Table 13.1 Distinction between a Contract of ft1dm1.1ttity un
1
Contract _of Guarant~e
 ~, .. .,,H,(. )
/ t :, ,n o •, t, ,t tn ,t ,t h n h ) ' ~-~Hhn,t o f (
.\ .:\',. ~,,t, , I
J.,, o f ch,· I ht' lt.,h,h,, n f tl1 1 l1 n f II1 ., I J.
t . / n it' lt.,fu
.; .,.-, ,1nh ·
u ,d n rn ,i (i , , ., /H )~ f•N f\H th
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nn ch,• h.,p)wt1o
' i
C (I IH tn bt 'J \c
,tan
') .
}n chM h.n.~tns •h .,l
( ,11\l)c~, l'H<"
:.. '.-\n rndnno t, \I I,)'\ h l hi\ 1hH~ hy thr' P• ll
(
h ip
t' dd11

it '
., chmf p ,H ,, ck h t•H , th t' \t H ,' f y ~l it' !\ tl
w tl w tr ,~
n ,, n fl.Im,-. hc•f.mr.1 ,~•:. , ."..... __ p, inc1p.,_1dd>!nr~
)'!<! Jl.!_~~ !' )~!•f ~ ()u1rw
~f
<•)n tr nn In o <' ()nf r.lft o f
,~ only
- -fi-.~ ~.l lw u \ ft 'l M rn O h 'N \ f h<•t <' a,
r th rt •t•
nlrnft o f rrnns ; 01h~ h t• tw t'( d
'n
in du\<·;•,~ o f <·o t,, rt•n ro n
ind<·mn,,,\ i.r. h
(• n fi p;il d l' h to r an
' rl w p ti
r/,.- in,IN;inili(•r and di< • du~ <reditor, tht' StYond
indemnified. h«-·h\t•rn t.he cr<
'ditor nnd
rincipal
dw surety a.nd p
dt'btor.

IONS
REVIEW QUEST

hort Answer Questions

S
mnity?
I. \Vhat is a n inde
n te e ?
2. \\-'hat is a g u a ra
?
h at d o y o u m e a n b y a surety
3. \V ty.
o d e s o f d is c h arge o f th e s u re
4. State the m n te e .
fere nt kinds o f g u a ra
.5. State the dif

ng A n s w e r Q u estions
Lo
c ha rg ed fr om th e liability?
rety d is
J. When is a su u ara n te e'. H ow can it be
rm 'continuing g
D isc u ss th e te
2. re v o k e d ?
em n ity an d gu a rantee.
3. Distinguish
between ind
o ntin g e n t c o n tr act. Explain .
tr ac t o f in demnity ·is a c
4. A co n
f a su r~ ty a g aills t the creditor.
.'i. Explain the
rights o
re o f th e su rety 's liability,
6. Discuss the
natu
o f a c o n tra ct o f indemnity?
W h at are th e characteristics
7.
 12 .l 3
~' ·Expl ain the right
.
s of th e indc, , 1111' l y \10 \ <\ t'r.
q· · ..._ itl guara ntee.
Expl ain the esst'n tials of ,._1 v·,\·
JO. Expl ain the cxlcn l of the liability of the ~urct y.

Essay Type Questions

1. Expl ain the rule that betw een co-sureties there is a quality 0£
burd en and bene fit. ,
indem nity and state the rights of an
- 2. Expl ain a cont ract of
inde mnit y hold er. ' I

iples of the law of guarantee regarding

3. State the princ
cont ribut ion to the same debt betw een the co-sureties.
y against the principal debto r
4. . Wha t are the right s or' a suret
and cred itor? ·

•.

it be

'.