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Base of distinction |
Indemnity |
Guarantee |
|
Purpose |
To save indemnifier from loss |
To provide necessary security to the creditor. |
|
Numbers of parties |
Two parties |
Three parties |
|
Number of Contract |
One agreement of contract |
Three agreement of contract |
|
Nature of liability |
Primary liability is of the indemnifier. It arises immediately after loss from the collateral event. |
Secondary liability is of the surety and it arises only on the default of the principal debtor. |
|
Consideration |
It has consideration. |
It has not direct consideration to surety. |
|
Commencement of liability |
The liability of indemnifier arises after the happening of the collateral event. |
The liability of the surety arises on the defaults of the principal debtor. |
|
Discharge from liabilities |
The indemnifier discharges after paying indemnity to the indemnity holder. |
The surety discharges when the creditor discharge or he fulfils the debtors' liability. |
|
Nature of contract |
It has contingent nature. |
It has general nature |
|
Right to reimbursement |
The indemnifier has no right of reimbursement of the amount paid to the indemnity holder. |
The surety has the right of reimbursement of the amount from the principal debtor, which is paid to the |
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creditor. |
|
Number of promisor |
Indemnifier is only one promisor |
Principal debtor and Surety both are promisor. |
|
Scope |
It has limited scope. |
It has boarder scope. |