What do you understand by contracts of indemnity and contracts of guarantee? Compare and contrast the two.
Contract of indemnity
- there are 2 parties indemnifier and indemnity holder.
- there is 1 contract between indemnifier and indemnified.
- the nature of liability of indemnifier is primary and independent
- in a contract of indemnity, the indemnifier promises without the request of debtor.
- a contract of indemnify is for reimbursement.
- there are 3 parties Creditor, Principal Debtor And Surety.
- there are 3 contracts between creditor and principal, principal and surety, surety and creditor.
- Liability of surety is Secondary.
- contract of Guarantee is for security of a debt or performance of promise.