Difference between Indemnity and Guarantee
Difference between Indemnity and Guarantee
|
Indemnity |
Guarantee |
| Section 124 of Indian Contract Act: a contract by which one party promises to save others from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person | Section 126 of Indian Contract Act: a contract to perform the promise, or discharge the liability of a third person in case of his default. |
| Two parties (Indemnifier and Indemnified) | Three parties (Principal Debtor, Creditor, Surety) |
| To provide compensation for loss | To give assurance to the creditor in lieu for his money |
| Indemnifier is the sole person liable | Liability shared between Principal Debtor (primary liability) and Surety (secondary liability) |
| Liability arises only on occurrence of a loss | Fixed legal liability |
CASE LIST
- Punjab national Bank Ltd. v. Bikram Cotton Mills & Anr. 1970 AIR 1973 [Summary] [Full Text]
- Ramchandra B. Loyalka v. Shapurji N. Bhownagree (1940) 42 BOMLR 550 [Summary] [Full Text]
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Difference between Contract of Indemnity and Guarantee