To learn about the distinctions between the guarantee and indemnity contracts, continue reading.
| Difference | Contract of Indemnity | Contract of Guarantee |
| Parties | Two parties are involved: Indemnity holder and Indemnifier | Three parties are involved: Creditor, Surety, and Principal Debtor |
| Number of contracts | There is one contract between the indemnifier. It is to make good the losses (repay)incurred by the indemnity holder. | There are three contracts.
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| Nature of liability | The indemnifier has primary liability. The liability for the indemnifier may or may not come up and is contingent. | The surety has a secondary liability. They’re only liable to pay when the principal debtor does not pay and defaults. |
| Third person default | An indemnifier’s liability does not depend on the default by another person. It arises as per the losses. | A surety’s liability depends on the default by the principal debtor. |
| Principal debt | A principal debt is not required for an indemnity contract. | A principal debt is necessary for the promise of repayment. |
| Subsequent recovery | The indemnifier cannot recover the indemnified amount from anyone. | The surety can recover the guarantee amount from the principal debtor. |
| Contract type in India | Can be written or oral | Can be written or oral |
