Explain any four differences between Contract of Indemnity and Contract of Guarantee.

Point of distinction\tContract of Indemnity\tContract of Guarantee\nNumber of party/ parties to the contract\tThere are only two parties namely the indemnifier [promisor] and the indemnified [promisee]\tThere are three parties-creditor, principal debtor and surety.\nNature of liability\tThe liability of the indemnifier is primary and unconditional.\tThe liability of the surety is secondary and conditional as the primary liability is that of the principal debtor.\nTime of liability\tThe liability of the indemnifier arises only on the happening of a contingency.\tThe liability arises only on the non performance of an existing promise or non-payment of an existing debt.\nTime to Act\tThe indemnifier need not act at the request of indemnity holder.\tThe surety acts at the request principal debtor.\nRight to sue third party\tIndemnifier cannot sue a third party for loss in his own name as there is no privity of contract. Such a right would arise only if there is an assignment in his favour.\tSurety can proceed against principal debtor in his own right because he gets all the right of a creditor after discharging the debts.\nPurpose\tReimbursement of loss\tFor the security of the creditor\nCompetency to contract\tAll parties must be competent to contract.\tIn the case of a contract of guarantee, where a minor is a principal debtor, the contract is still valid.