Multiple choice

Which of the following is incorrect in case of contract of indemnity and guarantee?

  1. In indemnity, the loss is to be made good as soon as it occurs

  2. In the case of guarantee, surety’s liability is secondary and principal debtor’s liability is primary

  3. An indemnity is for the reimbursement of loss

  4. A guarantee is for bearing the loss that is caused due to the action of principal debtor or any other party
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Guarantee contract is to perform the obligation or to discharge the liability of a third party in case of its default. Thus, option 4 is the correct option.

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