1. LAW OF INDEMNITY AND GUARANTEE
GROUP NO. 5
PRESENTS..
LAW OF INDEMNITY AND GUARANTEE

2. PRESENTED BY Sneha Chouhan (21) Vijaya Darne (23) Alpita Dharshnia(25)
Mayank Dubbey(27)
Triveni Dunna(29)

3. CONTENTS Introduction to business law History Law of indemnity
law of guarantee
conclusion

4. 1. Introduction to business law
Business law encompasses all of the laws that dictate how to form and run a business.
Business Law is a body of principles which are framed by the state in the administration of justice
This includes all of the laws that govern how to start, buy, manage and close or sell any type of business.

5. Business laws establish the rules that all businesses should follow.
It is a code of conduct.
It deals with rights and obligations of Business persons with their rights and obligations arising out of business transactions. It encompasses various aspects of Law and business like Laws on contracts, Companies, partnership, Insurance, Sale of goods, corporate relations, Negotiable instruments etc

6. 2. History
The Indian Contract Act 1872 sections 1-75 came into force on 1 September 1872. It applies to the whole of India except the state of Jammu and Kashmir
Indian Contract Act, 1872 is the main source of law regulating contracts in Indian law, as subsequently amended.

7. HISTORY….. (CONTD)
It determines the circumstances in which promise made by the parties to a contract shall be legally binding on them. All of us enter into a number of contracts everyday knowingly or unknowingly. Each contract creates some right and duties upon the contracting parties. Indian contract deals with the enforcement of these rights and duties upon the parties.

8. 3. Law of indemnity Definition: SEC. 124-
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, is called a “Contract of Indemnity”.
E. g. A car insurance policy

9. The person who promises to save the other from loss is called indemnifier.
The person whose loss is to be made good is called indemnified or indemnity holder

10. FEATURES TWO parties- Indemnity holder Indemnifier
Sec. 10- essentials should be satisfied
All insurance contracts are contracts of indemnity except life insurance.

11. RIGHTS OF INDEMNITY HOLDER
To claim damages
To claim costs
Other payments

12. Example-
The receipt pertaining to certain goods is lost B while travelling through Indian Railways. Now, A claims the goods from Railway company. The Railway Co. asked A to give an ‘indemnity bond’. A gets the goods. Here A is indemnifier and Railway Co is the indemnity holder. Later, B the real owner sues the Railway Co.. Now, the co. can claim indemnity from A, for the loss caused by his conduct.

13. 4. LAW 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.”
Eg- ‘A’ advances a loan of Rs 5000 to ‘B’ and ‘C’ promises to A that if ‘B’ doesn’t repay the loan, ‘C’ will do so. This is a contract of guarantee.

14. FEATURES Valid Contract ( essentials of Sec-10)
Consideration for surety is loan given by creditor.
Liability arises immediately when debtor makes default.
Implied Indemnity
Right Of Subrogation
Disclosure of Facts
Form- Oral or Written
Existence of Principal Debt.

15. KINDS OF GUARANTEE
Specific
Continuing

16. Revocation of Continuing Guarantee
By notice
By Death of Surety
By other modes :
Alteration without consent
Discharge of Debtor

17. 5. Conclusion Difference b/w Indemnity & Guarantee
Basis
Indemnity
Guarantee
Meaning
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, is called a “Contract of Indemnity”.
A “Contract of Guarantee” is a contract to perform the promise, or discharge the liability, of a third person in case of his default.
Section
124
126
No. of Parties 2 3
No. of Contracts 1
Nature of Liability
Primary
Secondary

18. Difference b/w Indemnity & Guarantee
Basis
Indemnity
Guarantee
Object
Compensation of loss
Relief to Debtor
Existence of Liability
Not necessary
Necessary
Interest
No real interest
Real interest for surety
Consideration
Consideration is present
No consideration for surety or SUFFICIENT consideration for surety in the form of loan given to the debtor.