CONTRACT OF INDEMNITY;

DEF. UNDER SEC 124 OF INDIAN CONTRACT ACT, 1872

“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.”
CONTRACT OF GUARANTEE;
DEF. UNDER SEC 126 OF INDIAN CONTRACT ACT, 1872
“a contract to perform the promise, or discharge the liability, of a third person in case of his
default.’’
Both contract of indemnity and contract of guarantee are classes of contingent contract and
not types of the same
However, the contract of indemnity depends upon a contingent event whereas the contract of
guarantee depends upon the performance of the party.

ESSENTIALS OF INDEMNITY CONTRACT

 Promise to indemnify
 2 parties involved in the contract which are:
Indemnifier(promisor)
Indemnified or indemnity holder(promise)
 Event of loss
 Future event
 Act of the own or other party
 Implied or expressed
 All essentials of a valid contract which are:
Free consent
Parties competent to contract
Lawful consideration
Lawful object
Not expressly declared void by the law

ESSENTIALS OF CONTRACT OF GUARANTEE

 There are 3 v