Abu Mansor Ali FCJ:

This appeal was argued before us in this court, sitting in Kuching on 23 February 2000. After having heard arguments from counsel both for the appellant and the respondent, we were invited by both counsel to properly consider the important point raised in this appeal. We then reserved our decision to write our grounds. This is our judgment.

It is not disputed that the appeal only raised one short issue of law and, according to counsel for the appellant, this is the first time this issue is before this court for decision. Hence this court granted the required leave to appeal. The short issue raised is whether s. 86 of the Contracts Act 1950 is only applicable to guarantor and not applicable to a contract of indemnity.

It is not necessary that we state the facts of this appeal. The facts had been clearly and admirably stated in the judgment of the Court of Appeal. In this appeal, we also proceeded on the basis that the appellant, as well as the respondent, were not disputing the terms guarantors and indemnity used in the judgment of both the High Court and Court of Appeal. It may well be stated that the contracts entered between the appellant and the re