What is indemnity and guarantee?
Indemnity is when one party promises to compensate the loss occurred to the other party, due to the act of the promisor or any other party. On the other hand, the guarantee is when a person assures the other party that he/she will perform the promise or fulfill the obligation of the third party, in case he/she default.
What is the difference between contract of indemnity and guarantee?
Contract of indemnity protects the promise from loss. Contract of guarantee is for the surety of the creditor. In Contract if indemnity, the promisor cannot file the suit against third person until and unless the promisee relinquishes his right in favour of the promisor.
Which of the following defines a contract of indemnity?
A contract of indemnity basically involves one party promising the other party to make good its losses. These losses may arise either due to the conduct of the other party or that of somebody else. To indemnify something basically means to make good a loss.
How many contract are there in contract of indemnity?
There are two parties in a contract of indemnity whereas a contract of guarantee has three parties. The liability of the indemnifier in the contract of indemnity is primary whereas for a contract of guarantee the liability of the surety is secondary and the primary liability is of the debtor.
What are the rights of indemnity holder?
An indemnity-holder has the right to recover from the indemnifier all damages which he may be compelled to pay in any suit in respect of any matter covered in the contract of indemnity.
What is a contract of Indemnity and law of guarantee?
Contract Of Indemnity And Law Of Guarantee. “Contract of indemnity” defined.-A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a “contract of indemnity”.
What are the rights of an indemnifier under the Indemnity Act?
Section 125 of the Act only lays down the rights of the indemnified and is quite silent of the rights of indemnifier as if the indemnifier has no rights but only liability towards the indemnified.
When to release surety from indemnity and guarantee?
Sec. 135 -In the event that an agreement is made between the Creditor and Principal debtor for intensifying the last’s liability or making a guarantee to him growth of time for doing the commitments or swearing up and down to not to beyond any doubt, releases the surety unless he consents to such an agreement.
Which is an example of an indemnity policy?
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.