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Under Section 124 of the Indian Contract Act, 1872, a contract of indemnity is defined as a contract by which:
AOne party agrees to pay a sum of money upon contingency
BTwo parties exchange promises with no consideration involved
COne party promises to save the other from loss caused by the conduct of the promisor or any other person
DA third party guarantees performance of an obligation
Answer & Solution
Correct answer: C. One party promises to save the other from loss caused by the conduct of the promisor or any other person
1. Section 124 of the Indian Contract Act 1872 defines indemnity.
2. The promisor undertakes to save the promisee from loss.
3. The loss may be caused by the promisor's own conduct or by any other person's conduct.
_Source: ICMAI BoS CMA Foundation Paper 1 (Business Laws), Module 2 §2.7 (Indemnity/Guarantee/Pledge/Agent), p. 91-99_