Indemnity Vs Guarantee Explained

Summary

In contract law, an indemnity involves a promise to compensate for a loss or damage, while a guarantee is a promise to fulfill an obligation if the primary party fails to do so. In the given scenarios, Priyas offer to pay university fees if Molly cannot is likely an indemnity, as it involves compensating for a potential loss. Gadowls agreement to pay the bank if Molly fails to make loan repayments is a guarantee, as it involves fulfilling an obligation if the primary party (Molly) defaults. Understanding these distinctions is crucial in determining the nature of contractual agreements.