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indemnity and guarantee law of contract
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Difference between indemnity and guarantee indemnity implies protection against loss, in terms of money to be paid for loss. 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.
Mr. Joe is a shareholder of Alpha Ltd. lost his share certificate. Joe applies for a duplicate one. The company agrees, but on the condition that Joe compensates for the loss or damage to the company if a third person brings the original certificate. 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.
Mr. Harry takes a loan from the bank for which Mr. Joesph has given the guarantee that if Harry default in the payment of the said amount he will discharge the liability. Here Joseph plays the role of surety, Harry is the principal debtor and Bank is the creditor.