Presentation

Topic:
Contract of indemnity & Contract of guarantee
Submitted By:
Malaika Asghar 21102040-068
Saad Butt 21102040-076
Abdul Raheem Dar 21102040-034
Hamza Nasir 21102040-043
Subhan Ahmed 21102040-073
Umer Farooq Jamil 21102040-018

Department:
ADP (IM&E-COMMERCE)

Submitted To:
Ma’am Faiza
Contract of Indemnity:
A contract of indemnity is a legal agreement between two parties, whereby one party promises to
compensate the other party for any loss or damage that may occur due to specified events. In this
contract, one party (known as the indemnifier) agrees to protect the other party (known as the
indemnity holder) from potential losses or liabilities arising from a specific situation. The
indemnity holder typically seeks indemnity against any losses incurred as a result of actions or
events beyond their control.

Key features of a contract of indemnity:

Indemnifier:
The party providing the indemnity is known as the indemnifier. They undertake to
compensate the indemnity holder for any losses or damages suffered.

Indemnity Holder:
The party receiving the indemnity is called the indemnity holder. They are
entitled to claim compensation from the indemnifier in case of any losses.

Loss or Damage:
The contract specifies the events or situations for which the indemnifier is liable to
compensate the indemnity holder. These events could include financial losses, damages, legal
liabilities, or other specified risks.

Indemnity Clause:
The contract includes an indemnity clause that outlines the scope and limitations
of the indemnifier's liability. It specifies the conditions under which the indemnity holder can
claim compensation.

Contractual Obligations:
The indemnifier agrees to fulfill their contractual obligations by
compensating the indemnity holder for the specified losses or damages.

Third-Party Claims:
In some cases, a contract of indemnity may involve indemnifying the indemnity
holder against third-party claims. This means the indemnifier assumes responsibility for any
claims made by third parties against the indemnity holder.
Contract of Guarantee:
A contract of guarantee is a legal agreement where one party (known as the
guarantor) agrees to be responsible for fulfilling the obligations of another party (known as the
principal debtor) towards a third party (known as the creditor). In simpler terms, a guarantee is a
promise by the guarantor to pay a debt or perform a duty on behalf of the principal debtor if the
debtor fails to do so.

Key features of a contract of guarantee:

Guarantor:
The guarantor is the party providing the guarantee. They undertake to fulfill the
obligations of the principal debtor if the debtor fails to do so.

Principal Debtor:
The principal debtor is the party who owes a debt or has a duty towards a third
party, known as the creditor. The guarantor assumes responsibility for the debtor's obligations.

Creditor:
The creditor is the third party to whom the principal debtor owes a debt or has a duty. If
the debtor fails to fulfill their obligations, the creditor can demand payment from the guarantor.

Primary Liability:
The guarantor's liability is secondary to that of the principal debtor. The creditor
must first attempt to recover the debt or enforce the obligation from the principal debtor before
seeking payment from the guarantor.

Guarantee Clause:
The contract includes a guarantee clause that defines the scope and limitations
of the guarantor's liability. It specifies the conditions under which the creditor can demand
payment from the guarantor.

Indemnity from the Principal Debtor:

If the guarantor pays the debt or fulfills the obligation on behalf
of the principal debtor, they may seek indemnity from the debtor. This means the guarantor can
recover the amount paid or expenses incurred from the principal debtor.
It's important to note that while both contracts involve one party assuming liability for another,
the key distinction lies in the nature of the obligations. In a contract of indemnity, the
indemnifier compensates the indemnity.