Indemnity &

Guarantee

INDEMNITY
Another
Party

One Party

Promise to
Save

+
=

INDEMNIT
Y

Loss

Z lost his Share Certificates

Applied for Duplicates
Z asked to furnish and INDEMNITY BOND
Company Protected

RIGHTS INDEMNITY HOLDER

Damages

Costs

Sums Paid

MAY be
Compelled
to pay

All Costs
which he
may be
Compelled
to Pay

All sums
paid upon
compromis
e

GUARANTEE

Perform
Promise

Surety

Discharge
Liability

Principal
Debtor

Of Third
Person

Creditor

ELEMENTS OF GUARANTEE
Oral or Written
Suretyship
Essentials of Valid Contract
3 Parties
Tripartite Agreement
Debtor Primarily Liable
Default must be Committed.

TYPES OF GUARANTEE

1. Ordinary Guarantee
2. Continuing Guarantee

INDEMNITY

GUARANTEE

Involvement of 2 Parties

Involvement of 3 Parties

Only 1 Contract.

Only 3 Contract.

The liability of indemnifier is

primary.

The liability of the surety is

secondary

Liability arises only ICO of

contingency.

Existing legal debt

Performance guaranteed by
the surety.

The indemnifier cant sue the

third party for loss in his own
name.

Surety after discharging the

debt can sue the principal
debtor.

Indemnity is for
reimbursement of loss.

The contract of guarantee is

for surety of debt .