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CMA Foundation · Fundamentals of Business Laws and Business Communication · Meaning of Indemnity, Guarantee, Pledge, Agent

In a contract of indemnity under the Indian Contract Act, 1872, the party who promises to save the other from loss is called the:

The promisor is called the indemnifier. He is the party who promises under Section 124 to save the other party, the indemnity-holder, from loss. The term surety applies to guarantees under Section 126, and pawnee applies to pledges.

  1. AIndemnity-holder
  2. BIndemnifierCorrect
  3. CSurety
  4. DPawnee

Explanation

The party who gives the promise to save the other from loss is the indemnifier (promisor), and the party protected is the indemnified or indemnity-holder. 'Surety' is the term for the person giving a guarantee under Section 126, and 'pawnee' relates to pledge. Hence only 'indemnifier' fits the promisor.

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