about contract

1. Name Pardeep kumar
• Class 2k20
• Subject contract act
• Topic indemnity and guarantee difference

2. A contract in which one party promises to another that he will compensate him for any loss suffered by him by the act of the
promisor or the third party.
A contract in which a party promises to another party that he will perform the contract or compensate the loss, in case of the
default of a their person, it is the contract of guarantee.
Section 124 of Indian Contract Act, 1872 Section 126 of Indian Contract Act, 1872
Two, i.e. indemnifier and indemnified Three, i.e. creditor, principal debtor and surety
One Three
Primary Secondary
To compensate for the loss To give assurance to the promisee
When the contingency occurs. Liability already exists.

3. BASIS FOR COMPARISON INDEMNITY GUARANTEE
Meaning A contract in which one party promises to another that he will compensate him for any loss
suffered by him by the act of the promisor or the third party.
A contract in which a party promises to another party that he will perform the contract or
compensate the loss, in case of the default of a their person, it is the contract of guarantee.
Defined in Section 124 of Indian Contract Act, 1872 Section 126 of Indian Contract Act, 1872
Parties Two, i.e. indemnifier and indemnified Three, i.e. creditor, principal debtor and surety
Number of Contracts One Three
Degree of liability of the promisor Primary Secondary
Purpose To compensate for the loss To give assurance to the promisee
Maturity of Liability When the contingency occurs. Liability already exists.

4. Guarantee
Mr. Harry takes a loan from the bank for which Mr.
Joesph has given the guarantee that if Harry default
in the payment of the said amount he will discharge
the liability. Here Joseph plays the role of surety,
Harry is the principal debtor and Bank is the creditor

5. Indemnity
Mr. Joe is a shareholder of Alpha Ltd. lost his share certificate. Joe applies for a
duplicate one. The company agrees, but on the condition that Joe compensates for
the loss or damage to the company if a third person brings the original certificate.
.

6. • Definition of Indemnity
• A form of contingent contract, whereby one party promises to the other party that he will compensate the
loss or damages occurred to him by the conduct of the first party or any other person, it is known as the
contract of indemnity. The number of parties in the contract is two, one who promises to indemnify the other
party is indemnifier while the other one whose loss is compensated is known as indemnified.
• The indemnity holder has the right to reimburse the following sums from the indemnifier:
• Damages caused, for which he was compelled.
• The amount paid for defending the suit.
• The amount paid for compromising the suit.
• One more common example of indemnity is the insurance contract where the insurance company promises
to pay for the damages suffered by the policyholder, against the premiums.

7. • Definition of Guarantee
• When one person signifies to perform the contract or discharge the liability incurred by the third
party, on behalf of the second party, in case he fails, then there is a contract of guarantee. In
this type of contract, there are three parties
• , i.e. The person to whom the guarantee is given is Creditor, Principal Debtor is the person on
whose default the guarantee is given, and the person who gives a guarantee is Surety.
• Three contracts will be there, first between the principal debtor and creditor, second between
principal debtor and surety, third between the surety and the creditor. The contract can be oral
or written. There is an implied promise in the contract that the principal debtor will indemnify the
surety for the sums paid by him as an obligation of the contract provided they are rightfully
paid. The surety is not entitled to recover the amount paid by him wrongfully.