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What is the Difference Between Contracts of Indemnity and Guarantee
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A Brief Introductory Guide to the English Law of Guarantees What is the Difference Between Contracts of Indemnity and Guarantee
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What is Indemnity?What is Guarantee?
Similarities Between Indemnity and Guarantee
Difference between Indemnity and Guarantee
Indemnity is a contractual obligation where one party promises to compensate for
the potential loss or damage incurred by another party. On the other hand,
guarantee is a legal promise made by a third party to cover a debt or obligation of
another party if they fail to fulfill their obligation. Here are other differences between
indemnity and guarantee in a tabular format:
Parameter Indemnity Guarantee
A guarantee is a legal
Indemnity is a contractual
promise made by a third
obligation where one party
party to cover a debt or
Def inition promises to compensate f or
obligation of another party
the potential loss or damage
if they f ail to f ulf ill their
incurred by another party.
obligation.
Guarantee is a secondary
Indemnity is a primary obligation that comes into
Nature of obligation that is play if the primary
Obligation independent of any other obligation (the debt) is not
obligations. f ulf illed.
Guarantee usually involves
Number of Indemnity typically involves
three parties – the creditor,
Parties two parties – the indemnif ier
the principal debtor, and
Involved and the indemnif ied party.
the guarantor.
Disclaim e r: This PDF is auto -generated based o n the info rmatio n available o n Shiksha as
o n 0 9 -Mar-20 24.
, The guarantor is liable f or
The indemnif ier is liable f or
the principal debtor’s
Risk the loss suf f ered by the
def ault, which is generally
indemnif ied party.
considered riskier.
The purpose of a
The purpose of indemnity is guarantee is to ensure the
Purpose to compensate f or a loss. perf ormance of an
obligation.
An example of indemnity is An example of a guarantee
Example
an insurance contract. is a bank guarantee.
What is Indemnity?
Indemnity is a contractual obligation where one party (the indemnifier) promises to
secure against potential loss or damage incurred by another party (the indemnified
party). This essentially means that the indemnifier is promising to compensate the
indemnified party for any loss or damage that they may suffer.
Indemnity is a form of insurance compensation for losses and damages. In legal
terms, it refers to exemption from liability for damages. Concept of indemnity is on
the basis of a contractual agreement formed between two parties, where one party
agrees to pay for the potential damages caused by the other party.
A common example of indemnity is an insurance contract in which insurer agrees to
compensate the insured person for any damages or losses incurred, in return for
premiums paid by the insured party.
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Features of Indemnity
Disclaim e r: This PDF is auto -generated based o n the info rmatio n available o n Shiksha as
o n 0 9 -Mar-20 24.
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