Posted February 1, 2014 by advocateguru in Learning Centre
 
 

CONTRACT OF INDEMNITY

Contract of Indemnity says that it is a contract under which one party promises to save the other party in the contract from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person. According to the section 124 of Indian Contract Act, 1872, “A contract of indemnity is a contract by which one party promises to save the other party from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person”.  For example:  contracts to indemnify B against the consequence of any proceedings which C may take against B in respect of a certain sum of 300 rupees. This is a contract of indemnity. Contracts of Indemnity can either be expressed or implied. For example: if A had done some work under the request of B, then for all the expenses incurred, B is liable. Now, there are two important words related to ‘Indemnity’. These words are Indemnifier and Indemnified or Indemnity Holder. Indemnifier is a person who has promised to indemnify or in other words he is a person who has promised to make the goods loss and the person whose loss is made good is called as Indemnified or Indemnity Holder. One of the examples which support the contract of indemnity is Contract of Insurance. In consideration of premium the insurer promises to make good and loss suffered by the assured account of the destruction by fire of his property insured against fire. Under the Indian Contract Act, the contract of Indemnity is restricted to certain cases like cases only where the loss, promised to be reimbursed, is caused by the conduct of the promisor or of any other person. The loss caused by events or accidents which do not depend on the conduct of any person, it seems, cannot be, sought to be reimbursed under a contract of indemnity.


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