Question

There are _____ to the contract of indemnity while there are _______ to the contract of guarantee.

• A. Three parties, Two parties
• B. Two parties, Three parties
• C. Two parties, Four parties
• D. Four parties, Two parties

Answer 1

Answer: (B)

Two parties, Three parties

Section 126 of the Indian Contract Act talks about Contract of Guarantee. It states A ‘contract of guarantee’ is a contract to perform the promise, or discharge the liability, of a third person in case of his default. It involves three parties.

Section 124 of the Indian Contract Act defines the “Contract of indemnity” —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, is called a “contract of indemnity.” It involves two parties.