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(a) Contract of Guarantee.
(i) This is a contract whereby a party referred to as a guarantor or surety undertakes to be collaterally or secondarily responsible for the acts or defaults of another known as the principal debtor.
(ii) The undertaking is made to the creditor.
(iii) It is a tripartite agreement.
(iv) A contract of guarantee may be sole,
continuing or fidelity.
(v) It consists of three parties, namely the
guarantor principal debtor and creditor.
(vi) The guarantor liability is secondary.
(vii) The guarantor has no direct interest in the
contract between the creditor and the principal
debtor.
(b) Contract of Indemnity.
(i) This is a contract whereby a party known as indemnifier undertakes to be primarily responsible for the performance of a particular thing.
(ii) The contract consists of two parties, the indemnifier and the party to be indemnified.
(iii) The indemnifier has a direct interest in the
contract.
(iv) The indemnifiers liability is primary.
maurice.mutuku answered the question on May 2, 2018 at 13:17
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