|Contract of Indemnity (Section 124)
||Contract of Guarantee (Section 126)
|It is a bipartite agreement between the indemnifier and indemnity-holder.
||It is a tripartite agreement between the Creditor, Principal Debtor, and Surety.
|Liability of the indemnifier is contingent upon the loss.
||Liability of the surety is not contingent upon any loss.
|Liability of the indemnifier is primary to the contract.
||Liability of the surety
is co-extensive with that of the principal debtor although it
remains in suspended animation until the principal debtor defaults.
Thus, it is secondary to the contract and consequenty if the principal
debtor is not liable, the surety will also not be liable.
|The undertaking in indemnity is original.
||The undertaking in a guarantee is collateral to the original contract between the creditor and the principal debtor.
|There is only one contract in a contract of indemnity - between the indemnifier and the indemnity holder.
||There are three
contracts in a contract of guaratee - an original contract between Creditor and
Principal Debtor, a contract of guarantee between creditor and surety,
and an implied contract of indemnity between the surety and the
|The reason for a contract of indemnity is to make good on a loss if there is any.
||The reason for a contract of guarantee is to enable a third person get credit.
|Once the indemnifier
fulfills his liability, he does not get any right over any third party.
He can only sue the indemnity-holder in his own name.
||Once the guarantor
fulfills his liabilty by paying any debt to the creditor, he steps into
the shoes of the creditor and gets all the rights that the creditor had
over the principal debtor.