Special Contracts begin with the dual concepts of Indemnity and Guarantee, which represent essential risk-allocation and credit-enhancement mechanisms in commerce.
This unit covers the statutory definitions under Part VIII of the Indian Contract Act, 1872. We will explore the rights of an indemnity holder under Section 125, contrast indemnity with guarantee, analyze the co-extensive liability and rights of a surety, and review the methods of discharging a surety from liability.
🔑 Key Learning Areas:
- Contract of Indemnity vs. Guarantee: Operational and structural differences.
- When does the indemnifier's liability begin (the Gajanan Moreshwar benchmark).
- Rights of a Surety: Rights of Subrogation, Contribution, and Security rights under Section 141.
- Discharge of Surety: How variance in terms, compound agreements, or loss of securities release the surety.