Page 103 - DMGT102_MERCANTILE_LAWS_I

Unit 7: Contracts of Guarantee and Indemnity

7.9 Review Questions Notes

1. What do you understand by the contract of guarantee?

2. “The liability of a surety is secondary and co-extensive with that of principal debtor.”
Comment.
3. What is a ‘continuing guarantee’? When can it be revoked?

4. Describe the rights of a surety against (i) co-sureties and (ii) the creditor.
5. Explain the circumstances under which a surety may be discharged from the liability by
the conduct of the creditor.

6. Define the contract of ‘Indemnity’. Describe the rights of the indemnifier and the indemnity-

holder.
7. “Indemnity is not necessarily given by repayment after payment. Indemnity requires that

the party to be indemnified shall never be called upon to pay.” Discuss.
8. Distinguish between a contract of guarantee and a contract of indemnity.

Answers: Self Assessment

1. False 2. True
3. False 4. True
5. True 6. True

7. True 8. Contract of guarantee
9. Contract of indemnity 10. Continuing guarantee
11. Co-sureties

7.10 Further Readings

Books
G. Vijayaragavan Iyengar (2007), Introduction to Banking, Excel Books, New Delhi,
India.
M.C.Kuchhal, “Business Law”, Vikas Publishing House.
N.D.Kapoor, “Elements of Mercantile Law”, Sultan Chand & Sons.
S.S Gulshan, Business Law, Third Edition, 2006, Excel Books, New Delhi.
S.S Gulshan, Mercantile Law, Third Edition, 2006, Excel Books, New Delhi.

Online links http://www.scribd.com/doc/19575522/Contract-indemnity
http://legalservicesindia.com/article/userarticles.php?aut_id=301
http://www.lawyersclubindia.com/articles/IS-Contract-of-Insurance-a-
contract-of-indemnity--3536.asp

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