A contract of indemnity and a contract of guarantee are two different legal agreements. Both involve parties making promises to each other, but with some key differences that will be explored in this article. We will look at the definition of both contracts, their purpose and how they differ from one another.
About Difference Between Contract Of Indemnity And Contract Of Guarantee
| Contract of Indemnity | Contract of Guarantee |
|---|---|
| A contract to reimburse for losses | A contract to promise performance |
| Usually involves a third party | Involves two parties only |
| Compensation is paid before loss occurs | Payment is made after the failure to perform |
| Primary purpose is to protect against financial loss | Primary purpose is to ensure contractual obligations are met |
| No right to sue in case of breach | Right to sue in case of breach |
| Indemnifier has no control over the act or omission | Guarantor may have some control over the act or omission |
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