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    CHP#11 Indemnity and Guarantee

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    Muhammad Hasnain

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    © All Rights Reserved
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    CHP#11 Indemnity and Guarantee

    Uploaded by

    Muhammad Hasnain
    4 views17 pages

    Copyright

    © © All Rights Reserved

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    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    4 views17 pages

    CHP#11 Indemnity and Guarantee

    Uploaded by

    Muhammad Hasnain

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    You are on page 1of 17

    Business Law

    Topic: Indemnity and Guarantee

    By: Riaz Hussain Ansari


    Lecturer Department of Business Administration
    University of Sahiwal

    1
    Learning Objectives

    You will be able:


    Define contract of indemnity and contract of

    guarantee. Differentiate between contract of


    guarantee and indemnity
    Identify parties in a contract of indemnity and

    contract of guarantee
    Describe rights and responsibilities of surety.

    2
    Contract of Indemnity
     A contract by which one party promises to
    save the other from loss caused to him by
    the conduct of the promisor himself, or by
    the conduct of any other person. .

    3
    Essentials of Contract of Idemnity

     Must be valid
     Promise from one party to suffer others
    lose
     Expressed or Implied

    4
    Rights of indemnity holder
     According to Section 125 of Contract Act, a
    promisee is entitled to recover the following
    amounts from the promisor provided that he
    acts within the scope of his authority:
     All damages which he may be compelled to pay in
    any suit in respect of any matter to which the
    promise to indemnify applies;
     All costs which he may be compelled to pay in
    bringing or defending such suits.

    5
    Rights of indemnity holder
     But the indemnified should not acted against
    the order of the promisor and acted as any
    prudent man would act under similar
    circumstances in his own case, or with the
    authority of the indemnifier and
     ll sums which he may have paid under the terms of
    any compromise of any such suit. The compromise
    should not be contrary to the orders of the
    indemnifier and should be a prudent one or
    authorized by the indemnifier.

    6
    Time of commencement of the
    indemnifier’s liability
     The Contract Act is silent on the time of
    commencement of the indemnifier’s liability
    under the contract of indemnity. On the basis
    of judicial pronouncement of courts, it can be
    said that the liability of an indemnifier
    commences as soon as the liability of the
    indemnity holder becomes absolute and
    certain. In other words, if the indemnity holder
    has incurred an absolute liability even though
    he has himself paid nothing, he is entitled to
    ask the indemnifier to indemnify him

    7
    Contract of Guarantee

    A contract of guarantee is a contract to


    perform the promise or discharge the
    liability of a third person in case of his
    default.

    8
    Essentials of Guarantee

    Ch 1 -9
    Different Between Idemnity
    and Guarantee

    10
    Nature of surety’s liability

     Nature of surety’s liability - it is co-extensive


     Limitation of surety’s liability
     Initiation surety’s liability
     Condition precedent to surety’s liability

    11
    Kinds of guarantee

    Specific guarantee
    When a guarantee extends to a single transaction or debt,
    it is called a specific or simple guarantee. The liability of the
    surety comes to an end when the guaranteed debt is duly
    discharged or the promise is duly performed.

    12
    Kinds of guarantee

    Continuing guarantee
    According to Section 129 of Contract Act, when a
    guarantee extends to a series of transactions, it is called a
    continuing guarantee. A surety’s liability continues until the
    revocation of the guarantee.

    13
    Right of Surety

    14
    Discharge of Surety

    15
    Any Question?

    16
    Many Thanks

    17

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