Start learning →

CA Foundation Contract of Indemnity and Guarantee — practice questions — page 2

Explore 70 free Contract of Indemnity and Guarantee questions in CA Foundation Businesslaw. Open each question or exercise to read its content, reference answers and available explanation.

Practise Contract of Indemnity and Guarantee with Quill →

Contract of Indemnity and Guarantee questions and exercises with answers

Showing questions 31–60 of 70.

A guarantees payment for five sacks of flour to be delivered by B to C in one lot. Is this a continuing guarantee?Read the answer and worked solution →A promises to be responsible up to 5,000 rupees for rents collected by C for B over the years. What is this guarantee?Read the answer and worked solution →A surety may revoke a continuing guarantee for future transactions by doing what?Read the answer and worked solution →Revocation of a continuing guarantee under Section 130 affects which transactions?Read the answer and worked solution →Surety dies; no contrary contract. Effect on a continuing guarantee?Read the answer and worked solution →A and B sign a promissory note to C; A is secretly B's surety, and C knows. Can C sue A?Read the answer and worked solution →A variance in the terms between the principal debtor and creditor, made without the surety's consent, has what effect?Read the answer and worked solution →A is surety for manager B's conduct. B and C raise B's salary without A's consent. A's position afterwards is what?Read the answer and worked solution →A guarantees C's loan to B due 1 March. C pays B on 1 January. A's position?Read the answer and worked solution →If the creditor releases the principal debtor by a contract, what is the effect on the surety under Section 134?Read the answer and worked solution →C guarantees A's building work for B, but B withholds promised timber. C is what?Read the answer and worked solution →Creditor gives principal debtor time without surety's assent. The surety is what?Read the answer and worked solution →The creditor compounds with the principal debtor, and the surety agrees to it. What is the surety's position?Read the answer and worked solution →A creditor agrees with a third person, not the debtor, to give time to the principal debtor. What happens to the surety?Read the answer and worked solution →Mere forbearance by the creditor to sue the principal debtor, without a contrary provision, does what to the surety?Read the answer and worked solution →A debt guaranteed by A falls due, but creditor C does not sue B for a whole year. What is A's position?Read the answer and worked solution →When the creditor releases one of several co-sureties, what is the effect on the others?Read the answer and worked solution →A co-surety released by the creditor remains responsible to whom?Read the answer and worked solution →Creditor's act inconsistent with surety's rights impairs his remedy against debtor. Result?Read the answer and worked solution →B builds a ship for C. A, B's surety, is unaware C prepaid the last instalments. Result?Read the answer and worked solution →On full payment, a surety gains which rights under Section 140?Read the answer and worked solution →Which statement about the surety's right to the creditor's securities under Section 141 is correct?Read the answer and worked solution →A creditor loses or parts with a security without the surety's consent. How is the surety affected?Read the answer and worked solution →C advanced 2,000 rupees to B on A's guarantee and held B's furniture as mortgage. C cancels the mortgage. A's liability?Read the answer and worked solution →A guarantee obtained by the creditor keeping silence as to material circumstances is what?Read the answer and worked solution →A hides clerk B's earlier default from C, who guarantees B's honesty. The guarantee is what?Read the answer and worked solution →A guarantees B's iron purchase; B and C hide a secret extra charge from A. Result?Read the answer and worked solution →Guarantee given on condition that co-surety Y joins; Y never joins. Result?Read the answer and worked solution →In a contract of guarantee, who impliedly promises to indemnify whom (Section 145)?Read the answer and worked solution →The surety can recover from the principal debtor sums he paid under the guarantee only if they were paid how?Read the answer and worked solution →

Worked practice questions

A guarantees payment for five sacks of flour to be delivered by B to C in one lot. Is this a continuing guarantee?

  1. Yes, repeated sales
  2. Yes, if C pays late
  3. Only if A is partner
  4. No, a single sale only
Show answer and solution

Correct answer: D. No, a single sale only

The guarantee relates to one delivery of five sacks, not a series, so it is a specific guarantee.

Open this question →

A promises to be responsible up to 5,000 rupees for rents collected by C for B over the years. What is this guarantee?

  1. Continuing guarantee
  2. Specific guarantee
  3. Contract of indemnity
  4. Contingent contract
Show answer and solution

Correct answer: A. Continuing guarantee

Collection of rents is a series of transactions, so the guarantee is continuing.

Open this question →

A surety may revoke a continuing guarantee for future transactions by doing what?

  1. Notice to creditor
  2. Telling debtor alone
  3. Court application
  4. Advance payment
Show answer and solution

Correct answer: A. Notice to creditor

Section 130 allows revocation as to future transactions by notice to the creditor.

Open this question →

How to practise

  1. Choose a Contract of Indemnity and Guarantee question and try to work out your answer.
  2. Open the question to check the correct answer and read its worked solution.
  3. Continue in the app for bite-sized lessons, explanations and review with Quill. You can start without creating an account.

Put it into practice

Continue with Contract of Indemnity and Guarantee practice for CA Foundation. Read explanations as you go. No signup form needed to start.

Practise Contract of Indemnity and Guarantee →

More Businesslaw topics

Negotiable Instruments Act 1881Nature of ContractsAgencyThe Limited Liability Partnership Act 2008PartnershipBreach of Contract and its RemediesPerformance of ContractCompanies Act 2013