Contract of Indemnity defined under Section 124 of Indian Contract Act 1872 A contract of insurance is kind of contract of indemnity.
Definition
Section 124 of Indian Contract Act 1872 defines Contract of indemnity - A contract by which one party promises to save the other from loss caused to him by the contract of the promisor himself, or by the conduct of any other person, is called a “contract of indemnity”.
Example :
'A' contracts to indemnify 'B' against the consequences of any proceedings which 'C' may take against 'B' in respect of a certain sum of 200 rupees. This is a contract of indemnity.
Object : The object of Contract of Indemnity is to protect the Indemnity Holder from loss or damage upon the happening of contingency.
Right of indemnity-holder when sued
Section 125 of said Act deals with the Rights of Indemnity Holder which are as follows
The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor -
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any such suit, if in bringing of 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;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contract to the orders of the promisor, and was one which it would have been prudent for the promise to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.
See also
1) Essentials of Valid Promissory Note
2) Revocation of continuing guarantee by change in firm
3) Kinds of Contracts
4) Distinction/ Difference between Bailment and Agency
5) Distinction / Difference between General offer and Specific offer
Definition
Section 124 of Indian Contract Act 1872 defines Contract of indemnity - A contract by which one party promises to save the other from loss caused to him by the contract of the promisor himself, or by the conduct of any other person, is called a “contract of indemnity”.
Example :
'A' contracts to indemnify 'B' against the consequences of any proceedings which 'C' may take against 'B' in respect of a certain sum of 200 rupees. This is a contract of indemnity.
- Indemnifire : The person gives the Indemnity is called Indemnifire
- Indemnified : The person for whose protection indemnity is given is called the Indemnified or Indemnity Holder
Object : The object of Contract of Indemnity is to protect the Indemnity Holder from loss or damage upon the happening of contingency.
Right of indemnity-holder when sued
Section 125 of said Act deals with the Rights of Indemnity Holder which are as follows
The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor -
(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(2) all costs which he may be compelled to pay in any such suit, if in bringing of 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;
(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contract to the orders of the promisor, and was one which it would have been prudent for the promise to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.
See also
1) Essentials of Valid Promissory Note
2) Revocation of continuing guarantee by change in firm
3) Kinds of Contracts
4) Distinction/ Difference between Bailment and Agency
5) Distinction / Difference between General offer and Specific offer
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