What is the difference between indemnity and guarantee?

Indemnities and guarantees are often confused. A guarantee is an agreement to meet someone else's agreement to do something usually to make a payment. An indemnity is an agreement to pay for a cost or reimburse a loss incurred by someone else.

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Notice of Demand for Assurance of Performance and an Indemnity Bond

King Washington Notice of Demand for Assurance of Performance and an Indemnity Bond

Name: King Washington Notice of Demand for Assurance of Performance and an Indemnity Bond
Brand: US Legal Forms
Rating: 4.72 (344 reviews)

Category:

Contracts - Notices

State:

Multi-State

County:

King

Control #:

US-02376BG

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Description

If a party to a contract has certain duties to perform under that contract and then transfers these duties to another person who is to perform them, there is a delegation of duties. Section 2-609 of the Uniform Commercial Code imposes an obligation on each party that the other's expectation of receiving due performance will not be impaired. When reasonable grounds for insecurity arise with respect to the performance of either party the other may in writing demand adequate assurance of due performance and until he receives such assurance may if commercially reasonable suspend any performance for which he has not already received the agreed return.

Between merchants the reasonableness of grounds for insecurity and the adequacy of any assurance offered shall be determined according to commercial standards.

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FAQ

The party receiving the demand is required to provide adequate assurance of its intended performance under the contract within a reasonable time but in no event more than 30 days after its receipt of the demand request.

An indemnity is a contract by one party to keep the other harmless against loss, but a contract of guarantee is a contract to answer for the debt, default or miscarriage of another who is to be primarily liable to the promisee .

Promises to save the other from loss5 caused to him by the conduct of the promisor himself, or by the conduct of any other person6, is called a contract of indemnity. a) On analysis of the said section, the expression loss used in the said section, is an attribute of consideration, in the Contract of Indemnity.

Comment: Under the Uniform Commercial Code (UCC), when a party to an agreement for the purchase or sale of goods has reasonable grounds to believe its counterparty will not perform as promised, the party may make a written demand for assurance of due performance from the counterparty.

To indemnify another party is to compensate that party for losses that that party has incurred or will incur as related to a specified incident.

Adequate Assurance of Performance means sufficient security in the form, amount, for a term, and from an issuer, all as reasonably acceptable to X, including, but not limited to cash, a standby irrevocable letter of credit, a prepayment, a security interest in an asset, or a guaranty.

Indemnities and guarantees are often confused. A guarantee is an agreement to meet someone else's agreement to do something usually to make a payment. An indemnity is an agreement to pay for a cost or reimburse a loss incurred by someone else.

If either party (X) has reasonable grounds for insecurity regarding the performance of any obligation under this Contract (whether or not then due) by the other party (Y) (including, without limitation, the occurrence of a material change in the creditworthiness of Y), X may demand Adequate Assurance of Performance

The doctrine of adequate assurance allows a contract party with reasonable grounds to believe that its counterparty will be unable to perform, to demand that the counterparty provide adequate assurances that the counterparty will perform its contractual obligations.

More info

16 pagesMissing: Demand ‎Assurance A performance bond provides an obligee with a guarantee that, in the event of a contractor's default, the surety can be called upon to complete or cause.Performance Assurance provided in the form of a Letter of Credit shall be subject to the following provisions: Page 22. 18. This person must be the property owner. 2. Guarantor: The party providing the collateral in the form of a Letter of Credit, a Surety Bond,. Exhibit A, Surety Bid Bond. Exhibit B, Performance Bond (Surety).

King Washington Notice of Demand for Assurance of Performance and an Indemnity Bond

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