Distinguish or Difference between the Contract of Indemnity and Contract of Guarantee

Both contracts may be distinguished in the following cases :

1. Difference in Meaning :-

Contract of indemnity : In the contract of indemnity one person promises to save the other from any loss.

Contract of guarantee : In the contract of guarantee one person gives guarantee for the performance of the contract.



2. Difference in the Number of Parties :-

Contract of indemnity : Under the contract of indemnity there are two parties.

Contract of guarantee : Under the contract of guarantee there are three parties.



3. Difference in the Liability :-

Contract of indemnity : Under indemnity contract the basic liability falls on the indemnifies.

Contract of guarantee : In case of guarantee contract surety has the secondary liability.



4. Difference in the Number Of Contracts :-

Contract of indemnity : Under the indemnity contract there is one contract only.

Contract of guarantee : Under the contract of guarantee there must be at least three contracts.



5. Difference in the Nature of Interest :-

Contract of indemnity : In case of indemnity contract, indemnifies has the interest in earning commission and premium.

Contract of guarantee : In case of guarantor he has no any other interest except guarantee.



6. Difference in the Right of Claim :-

Contract of indemnity : The indemnifies cannot sue the third party.

Contract of guarantee : Guarantor is entitled to proceed against the principal debtor in his own name. If he has paid the debt.



7. Difference in the Performance of Contract :-

Contract of indemnity : Contract of indemnity depends upon the possibility of risk or loss.

Contract of guarantee : In case of guarantee there is an existing debt or duty performance about which guarantee is given.

6 comments:

Anonymous said...

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Anonymous said...

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Anonymous said...

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Unknown said...

Much Helpful

Smirti Bam said...

Indemnity and Guarantee are a type of contingent contracts, which are governed by Contract Law. Simply put, indemnity implies protection against loss, in terms of money to be paid for loss. Indemnity is when one party promises to compensate the loss occurred to the other party, due to the act of the promisor or any other party. On the other hand, the guarantee is when a person assures the other party that he/she will perform the promise or fulfill the obligation of the third party, in case he/she default.
Contract of Idemnity Vs Guarantee

Unknown said...

helpful

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