Law: Contract, Act, 1872

Section: 23,124,126

Law: Limitation Act, 1908

Section: 83

(a) Contract Act (IX of 1872), Ss. 124 & 126 "Contract of Indemnity" and "Contract of Guarantee" Distinction. There is a difference between a contract of guarantee and a contract of indemnity. For a contract of guarantee or surety¬ship there must be tripartite agreement between the creditor, the principal debtor and the surety. In the case of a contract of indemnity, it is not necessary for the indemnifier to act at the request of the debtor, whereas; in the case of a contract of guarantee or surely, it is necessary that surety or guarantor should give the guarantee at the request of the debtor. In the former case, it is a direct engagement between the two parties thereto, whereas, in the latter, there are three parties, the creditor, the debtor and the surety who undertakes at the request of the debtor to answer the default .or miscarriage of the debtor. In the present case the bond w .is in these terms: In consideration of your' selling merchandise in which you deal to Messrs C on credit during the whole year 1949, I do hereby agree to keep you jointly and severally indemnified against all consequences for your so selling to C on credit and I hereby further undertake and guarantee to pay you all dues on demand payable in connection with .any goods and merchandise which you have sold to C, should C fail to settle his dues within the time fixed by you." On behalf of the executant of the bond it was contended that the bond was not a bond of indemnity but was really a contract of surety: Held, that as there was no evidence that the person executing the bond gave the guarantee at the request of the debtor C, the contract in' this case was a contract of indemnity and not a contract of surety. Harburg India Rubber Comb Company v. Martin (1902) 1 K B 778 ; Guild & Co. v. Conrad (1894)2 Q B D 885 ; K. V. Periyamianna Marakkayar & Sons v. Banians & Co. A I R 1926 Mad. 544 ; Ramchandra B. Loyalka v. Shapurji N. Bhownagree A I R 1940 Bom. 315 ; Municipal Committee, Buldana v. Vishnu¬Damodhar Bbalerao and another A I R 1949 Nag. 48 ; Mst. Radha Kunwar v. Ram Narain and others A I R 1952 All. 587 ; Janwatraj v. Jethmal A I R 1958 Rajasthan 343 and Messrs…

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