Indemnity

and

Guarantee

Contract of Indemnity

• Meaning• Rights of Indemnity holder

(i) Recover costs paid in bringing a suit

(ii) Recover damages suffered• Rights of Indemnifier:

Similar to those of surety

Contract of GuaranteeMeaning

Features• Primary liability in some person• Essentials of valid contract• Writing not necessary

Kinds of Guarantee

(i) Specific guarantee

(ii) Continuing guarantee

Revocation of continuing guarantee• By notice• By death of surety

By other modes• Variance in the term of contract• Release or discharge of principal debtor• Agreement b/w Creditor & Debtor

Rights of Surety

(i) Against creditors

(ii) Against principal debtor

(iii) Against Co-sureties

Rights against Creditors

1. Right of set off

2. Right to securities

Rights against principal debtor

1. Right of Subrogation

2. Right to indemnity

Rights against Co- sureties

Right to claim contribution

Right to share security

Discharge of Surety

A. Discharge by Revocation

(I) By Notice

(II) By Death of Surety

(III) By Novation

B. By the Conduct of creditor

(i) Variance in the term of contract

(ii) Release or discharge of principal debtor or any ommision of creditor

(iii) Compounding with debtor

(iv)Creditor’s act or ommision impairing surety’s eventual remedy

(v) Loss of security

C. Discharge by invalidation of Contract

(i) Guarantee obtained by misrepresentation

(ii) Guarantee obtained by concealment

(iii) Guarantee on contract that creditor shall not act on it untill a co-surety joins.

THANK YOU

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