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The Guarantee And Indemnity Agreement is a crucial legal instrument in Indian commercial and financial transactions, structured under the Indian Contract Act, 1872, and related legislation. It is typically used when a creditor requires additional security beyond the principal debtor's covenant, such as in loan agreements, lease arrangements, or commercial contracts. The document combines two forms of security: a guarantee (promising to fulfill another's obligations) and an indemnity (providing protection against loss). It includes detailed provisions on the scope of guaranteed obligations, enforcement mechanisms, representations and warranties, and preservation of rights. The agreement is particularly important in corporate financing, project finance, and real estate transactions where lenders or contractual counterparties seek additional comfort on performance of obligations.

1. Parties: Identifies the guarantor, the beneficiary (creditor), and the principal debtor

2. Background: Explains the context of the primary obligation and why the guarantee is being provided

3. Definitions: Defines key terms used throughout the agreement, including Guaranteed Obligations, Security, Events of Default

4. Guarantee: Sets out the primary guarantee obligations, scope, and nature of the guarantee (continuing/specific)

5. Indemnity: Details the indemnification obligations of the guarantor

6. Representations and Warranties: Statements of fact and assurances given by the guarantor

7. Preservation of Rights: Provisions ensuring the guarantee remains valid despite variations to the primary obligation

8. Enforcement: Procedures and circumstances under which the guarantee can be enforced

9. Payments: Terms regarding payment obligations, including timing, method, and currency

10. Costs and Expenses: Allocation of costs related to the preparation and enforcement of the guarantee

11. Notices: Communication procedures between parties

12. Governing Law and Jurisdiction: Specifies Indian law as governing law and jurisdiction for disputes