We have come across two legal terms viz: Contract of Indemnity and Contract of Guarantee. They are not the same and there are differences between the two. Here are the differences between the two.
|Contract of Indemnity
|Contract of Guarantee
|One person promises here to save the other from any loss
|Here, one person gives guarantee for the performance of contract
|Here there are two parties
|Here there are three parties
|Here is only one Contract
|Here there must be at least three contracts
|Here the basic liability falls on indemnifies
|Here surety has the secondary liability
|Indemnifies has the interest in earning commission and premium
|He has no any other interest except Guarantee.
|The indemnifies cannot sue the third party
|Guarantor is entitled to proceed against the principal debtor in his own name if he has paid the debt
|The performance depends upon possibility of risk or loss
|Here the there is an existing debt or duty performance about which guarantee is given.