Indian Contract Act Section 145 — Implied promise to indemnify surety

CHAPTER VIII OF INDEMNITY AND GUARANTEE

Commercial / Corporate

Summary

In every contract of guarantee, the law automatically reads in a promise by the principal debtor to compensate the surety. This means the surety can recover from the principal debtor any amount that the surety has rightfully paid under the guarantee. However, the surety cannot recover any amount that he has paid wrongfully, meaning payments made without proper legal basis or obligation.

Official Text

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