 |
| Distinguish |
Difference between Contract of Indemnity and Guarantee
1. Number of Parties: -
In an indemnity contract there are two parties, the Indemnifier and the indemnity holder. In a guarantee contract, there are three parties, that is, the creditor, the main debtor and the guarantee.
2. Liability: -
In a compensation contract, the promisor assumes an independent responsibility for the guarantee that is secondary, so that he is responsible for paying only if the main debtor does not pay.
3. Existence of contractual liability: -
In a guarantee contract, there is an existing debt or duty, the fulfillment of which is guaranteed by the guarantee. In an indemnity contract, the liability of the indemnifier arises only in the event of a contingency.
4. Right of guarantee: -
In a guarantee contract, the guarantee, after having released the debt with the creditor, can proceed against the main debtor, in an indemnity contract, the loss falls on the indemnifier, except in certain cases specials. cases.
5. Number of contracts: -
There is only one contract in the event of an indemnity contract, that is, between the indemnifier and the indemnified. In a guarantee contract, there are three contracts: one between the main debtor and the creditor, the second between the creditor and the guarantee and the third between the guarantee and the main debtor.
6. Request to act: -
It is not necessary for the indemnifier to act at the request of the indemnified, in the case of a guarantee contract, it is necessary that the guarantee grant the guarantee at the request of the debtor.
7. Security: -
A guarantee contract is to provide the necessary security to the creditor against his advances, but an indemnity contract is made for the reimbursement of the loss.
When the entire agreement between the guarantor and the creditor alone showed that it was a guarantee contract between the title and the form that was selected for enforcement, reference was made to the particular clause of the original agreement between the creditor and the Main debtor and all the clauses included in the text of the agreement spoke of the guarantee and nothing else, the agreement should be interpreted as a guarantee contract and not as a compensation contract.
A guarantee contract, unlike an indemnity contract that is the bond, is tripartite when three people, viz. the main debtor, the creditor and the collateral are involved. But it is not necessary or sine qua non that the main debtor must expressly do so for a part of the guarantee document, since it is appropriate if the main debtor is a party by implication. [Nagpur Nagarik Sahakari Bank V. Union of India, AIR 1981 A.P.153]
0 Comments