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CS Executive · Jurisprudence, Interpretation and General Laws · Contract Law

Meera promises to compensate Rohan for any loss he suffers if a third party, Sunil, files a claim against him over a consignment. Under the Indian Contract Act, 1872, this arrangement is best described as a contract of:

It is a contract of indemnity. Section 124 covers a promise to save another from loss caused by the promisor's own conduct or the conduct of any other person, and Meera promises to save Rohan from loss arising from Sunil's claim.

  1. AGuarantee, because a third person is involved
  2. BIndemnity, because one party promises to save the other from loss caused by another person's conductCorrect
  3. CBailment, because goods are involved
  4. DAgency, because Meera acts for Rohan

Explanation

Section 124 defines indemnity as a promise to save the other from loss caused by the promisor's own conduct or by the conduct of any other person. Meera promises to save Rohan from loss arising from Sunil's claim. It is not guarantee, since no promise to perform a third person's liability on his default is made.

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