Definition of Indemnity

A form of contingent contract, in which one party promises the other party that it will compensate for the loss or damage caused by the conduct of the first party or another person, is known as a contract of indemnity. The number of parties to the contract is two, one promising to indemnify, another party is indemnifier and the other whom loss compensation is given is known to be indemnified.

The Indemnify holder has the right to pay the following amounts from the indemnifier:

• Injuries caused, for which he was compelled.

• The amount paid to defend this case.

• The amount paid to compromise the suit.

Definition of Guarantee

Where one person demonstrates a contract or extends a debt incurred by a third party, on behalf of a second party, in the event of a failure, then there is a guarantee agreement. In this type of contract, there are three sides, which means that the person who is guaranteed by the Creditor, the Principal Debtor is the person to whom the guarantee is given, and the person who gives the guarantee is Surety.

Three contracts will be there, first between the principal debtor and the lender, the second between the principal debtor and the surety, and the third between the surety and the creditor. The contract can be oral or written. There is a promise stated in the agreement that the principal debtor will be liable for the amount paid by him as a contractual obligation as long as they are properly paid. The collateral is not entitled to the money paid by him unfairly.

The Key Difference between Indemnity and Guarantee

The following are the main differences between Indemnity and Guarantee:

1. In the indemnity contract, one party makes a promise to the other that it will compensate for any losses incurred by the other party as a result of the action of the promoter or another person. In a guarantee contract, one party makes a promise to the other party that it will make an obligation or pay off the debt, if a third party fails to do so.

2. The Indemnity is defined in Section 124 of the Indian Contract Act, 1872, and in Section 126, the Guarantee is defined.

3. In a contract of indemnity, there are two sides, indemnifier and indemnified but in a guarantee contract, there are three parties namely a debtor, a creditor, and a surety.

4. In the contract of Indemnity the liability of the indemnifier is primary while in the contract of Guarantee the primary liability is of the Debtor.

5. The purpose of the Indemnity agreement is to save the other party from losses. However, in the case of a contract of Guarantee, the purpose is to assure the creditor that the contract will be executed, or the liability will be discharged.

6. In the Indemnity contract, the liability arises when contingency happens while in the contract of Guarantee, the debt already exists.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.

If you are interested in participating in the same, do let me know.

Do follow me on Facebook, Twitter  Youtube and Instagram.

The copyright of this Article belongs exclusively to Ms. Aishwarya Sandeep. Reproduction of the same, without permission will amount to Copyright Infringement. Appropriate Legal Action under the Indian Laws will be taken.

If you would also like to contribute to my website, then do share your articles or poems at adv.aishwaryasandeep@gmail.com

We also have a Facebook Group Restarter Moms for Mothers or Women who would like to rejoin their careers post a career break or women who are enterpreneurs.

We are also running a series Inspirational Women from January 2021 to March 31,2021, featuring around 1000 stories about Indian Women, who changed the world. #choosetochallenge