Contract of Indemnity

Definition

The Contracts of Indemnity has been
defined as: "A Contract whereby one party
promises to save the other from loss caused
to him by the conduct of the promisor
himself or by the conduct of any other
person, is called a contract of indemnity ."
Indemnity , in simple words, is protection
against future loss.
The person who promises to save the other
is called the Indemnitor or Indemnifier
and the person who is compensated is the
Indemnitee , Indemnified or the
indemnity-holder . An indemnity can be
defined as a sum paid by A to B by way of
compensation for a particular loss suffered
by B. A, the indemnitor may or may not be
responsible for the loss suffered by the B,
the indemnitee.

Forms of indemnity include
cash payments, repairs, replacement, and
reinstatement.
Contract of Indemnties should all satisfy the
conditions of a valid contract .
All Contracts of Insurance are Contracts of
Indemnity except life insurance.

Rights

Rights of Indemnified or Indemnity
Holder
all damages which he may be compelled to
pay in any suit in respect of any matter to
which the promise to indemnify applies;
all costs which he may be compelled to pay
in any such suit if, in bringing or defending
it, he did not contravene the orders of the
promisor, and acted as it would have been
prudent for him to act in the absence of any
contract of indemnity, or if the promisor
authorised him to bring or defend the suit;
all sums which he may have paid under the
terms of any compromise of any such suit,
if the compromise was not contrary to the
orders of the promisor, and was one which
it would have been prudent for the
promisee to make in the absence of any
contract of indemnity, or if the promisor
authorised him to compromise the suit.
The indemnity holder can call upon the
indemnifier to save him from loss even
before the actual loss is incurred.

Rights of Indemnifier

The Indian Contract act remains silent on this matter.

Contract of Indemnity as per Indian
Contract Act

Section 124 of Indian Contract Act, 1872
defines Contract of indemnity.
Section 125 of Indian Contract Act, 1872
specifies the Rights of indemnity-holder
when sued
Sections in the Indian Contract Act, 1872