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

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