145Implied promise to indemnify surety
In every contract of guarantee there is an implied promise by the principal debtor to indemnify the surety, and the surety is entitled to recover from the principal debtor whatever sum he has rightfully paid under the guarantee, but, no sums which he has paid wrongfully.
Illustrations
(a) B is indebted to C, and A is surety for the debt. C demands payment from A, and on his refusal sues him for the amount. A defends the suit, having reasonable grounds for doing so, but is compelled to pay the amount of the debt with costs. He can recover from B the amount paid by him for costs, as well as the principal debt.
(b) C lends B a sum of money, and A, at the request of B, accepts a bill of exchange drawn by B upon A to secure the amount. C, the holder of the bill, demands payment of it from A, and, on A's refusal to pay, sues him upon the bill. A, not having reasonable grounds for so doing, defends the suit, and has to pay the amount of the bill and costs. He can recover from B the amount of the bill, but not the sum paid for costs, as there was no real ground for defending the action.
(c) A guarantees to C, to the extent of 2,000 rupees, payment for rice to be supplied by C to B. C supplies to B rice to a less amount than 2,000 rupees, but obtains from A payment of the sum of 2,000 rupees in respect of the rice supplied. A cannot recover from B more than the price of the rice actually supplied.
Download our fully-offline, High speed android app.- Click here
- 124 "Contract of indemnity" define
- 125 Rights of indemnity-holder when sued
- 126 "Contract of guarantee", "surety", "principal debtor" and "creditor"
- 127 Consideration for guarantee
- 128 Surety's liability
- 129 "Continuing guarantee"
- 130 Revocation of continuing guarantee
- 131 Revocation of continuing guarantee by surety's death
- 132 Liability of two persons, primarily liable, not affected by arrangement between them that one shall be surety on others default
- 133 Discharge of surety by variance in terms of contract
- 134 Discharge of surety by release or discharge of principal debtor
- 135 Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor
- 136 Surety not discharged when agreement made with third person to give time to principal debtor
- 137 Creditor's forbearance to sue does not discharge surety
- 138 Release of one co-surety does not discharge others
- 139 Discharge of surety of creditor's act or omission impairing surety's eventual remedy
- 140 Rights of surety on payment or performance
- 141 Surety's right to benefit of creditor's securities
- 142 Guarantee obtained by misrepresentation invalid
- 143 Guarantee obtained by concealment invalid
- 144 Guarantee on contract that creditor shall not act on it until co-surety joins
- 145 Implied promise to indemnify surety
- 146 Co-sureties liable to contribute equally
- 147 Liability of co-sureties bound in different sums