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.
On the other hand, 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.
What does guarantee and indemnity mean?
The guarantee and indemnity will provide that, in the event the borrower fails to perform its obligations under the loan, the lender can ask the guarantor to carry out the obligations on the borrower’s behalf. A guarantee and indemnity is generally required where the borrower is a high credit risk.
What is the meaning of indemnity insurance?
Indemnity insurance is a contractual agreement in which one party guarantees compensation for actual or potential losses or damages sustained by another party. These special insurance policies indemnify or reimburse professionals against claims made as they conduct their business.
What is a contract of guarantee?
A Contract to perform the promise, or discharge the liability, of a third person in case of his default is called Contract of Guarantee. A guarantee may be either oral or written. The person who gives the guarantee is called the Surety. The person on whose default the guarantee is given is called the Principal Debtor.
What is indemnity example?
Definition and examples. Indemnity is compensation paid by one party to another to cover damages, injury or losses. An example of an indemnity would be an insurance contract, where the insurer agrees to compensate for any damages that the entity protected by the insurer experiences.