Difference between contract of indemnity and contract of guarantee has been discussed in this article. And, before that let’s see what is the difference between contract of guarantee and contract of indemnity?
|Difference Between Contract of Indemnity and Contract of Guarantee
Contract of guarantee and indemnity are the types of contingent contracts which are governed by the Indian Contract Act, 1872.
Difference Between Contract of Indemnity and Contract of Guarantee
|Contract of Indemnity
|Contract of Guarantee
|In the contract of indemnity, the word indemnity means “security against loss”.
|In the contract of guarantee, the word guarantee means “an individual person assures the opposite party that he or she will fulfil the obligation in case of a default in the contract”.
|The contract of indemnity is defined under section 124 of the Indian Contract Act, 1872.
|Whereas, the contract of guarantee has been defined under section 126 of the Indian Contract Act, 1872.
|In the contract of indemnity, there are two contracting parties namely the indemnifier and indemnity holder.
|In the contract of guarantee, there are three contracting parties namely the principal debtor, creditor and surety.
|In the contract of indemnity, there is only one contract formed between the indemnifier and indemnity holder.
|But, in the contract of guarantee, there are three contracts are formed; 1) between principal debtor and creditor, 2) between the principal debtor and surety, and 3) between creditor and surety.
|The main purpose of the contract of indemnity is to compensate for the loss.
|The main object of the contract of guarantee is to give assurance to the promissee.
|The primary liability arises in the indemnity contract.
|Secondary liability arises in the guarantee.
- Law of Contract – Bare Act 2021 Edition Professional
- The Indian Contract Act 1872 Bare Act 2021 Edition
- Law of Contract & Specific Relief Dr Avtar Singh Latest Edition-2020
- Pollock & Mulla – The Indian Contract Act, 1872
- CONTRACT Paper I – By R.K. Bangia [Edtion 2019 – 2020]
- CONTRACT Paper-II – By R. K. Bangia
- NOTES ON INDIAN CONTRACT ACT 1872: BEST NOTES FOR LAW STUDENTS