Liabilities under Contract of Indemnity
It is interesting to note that the Indian Contract Act 1872 has not provided for the time of commencement of liability for indemnifiers. However, while referring to several landmark judgments and referring to major judicial pronouncements, it can be established that the liability of an indemnifier begins as and when the liability of the indemnity holder becomes absolute and certain. This proposition has been observed by the courts in several cases.
For example, Prateek promises to compensate Anuv for any loss that he may suffer by filing a suit against Atif. The court orders Prateek to pay Atif damages of ₹5,000. As the loss has become certain, Prateek may claim the amount of the loss from Anuv and pass it on to Atif.
Contract of Indemnity: Meaning & Features (Indian Contract Act)
Indemnity means security against losses. When two parties come together to commence a business, the main intention for both parties to formally enter into a contract is to be shielded from any type of probable loss or damage due to the uncertainty of the business. Contract of Indemnity relates to such special circumstances, where it establishes the duties and rights of the parties in a contract in the event of any uncertainty. Contract of Indemnity establishes that one party will pay the other party to the contract in case of any losses or an unprecedented and uncertain event. The Indian Contract Act, 1872, contains provisions related to the Contract of Indemnity under Section 124.
Geeky Takeaways:
- Indemnity means security against loss, or it can also be referred to as making good the loss. Indemnity protects a party from losing money or being affected by uncertainty.
- In an indemnity contract, one party pays another for possible losses or damage.
- The main objective is to get the party that was compensated back to where it was financially before.
- Insurance contracts are a classical example of a Contract of Indemnity.
Table of Content
- Contract of Indemnity
- Features of Contract of Indemnity
- Rights of an Indemnity Holder
- Liabilities under Contract of Indemnity
- Conclusion
- Contract of Indemnity- FAQs
Contact Us