Marketing Case
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Contract of Indemnity
The dictionary meaning of indemnity is to protect against loss or make good the loss. An indemnity is a contract in which one party agrees to reimburse the loss of other party which have occur or may occur. Indemnity may be paid in the form of cash, repair or replace the damage good this is depend upon the agreement e.g insurance policy.
Definition:
According to section 124 of Indian contract act, 1872
“A contract by which one party promises to save other party from loss caused to him by the conduct of prosier himself, or by the conduct of any other person”.
Parties of the Contract:
Indemnifier/promisor
Indemnified/indemnity holder/promisee
Indemnifier:
The person who promises to make good the loss of other party is called promisor or indemnifier.
Indemnity Holder:
The person to whom promise is made to fulfill his loss is known as promise or indemnified or indemnity holder. It is protection against the anticipated loss in the form of promise to pay money or good.
Examples:
Y and Z claim AC from a railway company as rival owners. Y takes delivery of the goods by agreeing to compensate the railway company against the loss in case Z turns out to be the true owner. There is a contract of indemnity between Y, the promisor and the railway company, the promise.
S contracts to indemnify R against the consequences of any proceedings which a third person, say C may take against R, in respect of a certain sum of money. This is a contract of indemnity.
In the above example y is indemnifier and railway is indemnity holder. Here y promises with the railway that he will make good the loss if Z is original owner.
Essentials of Indemnity:
Following are the essentials of valid contract of indemnity
There should be promise by one person to another
The promise should be to save other from loss
Indemnifier must suffer the loss
It may be expressed or implied
It only covers the actual loss
It must contain all the essentials of valid contract like free consent, capacity of parties, consideration etc.
Rights of Indemnity Holder: (section 125)