{"id":2772,"date":"2017-09-15T09:37:12","date_gmt":"2017-09-15T04:07:12","guid":{"rendered":"http:\/\/www.infipark.com\/articles\/?p=2772"},"modified":"2017-11-08T00:16:27","modified_gmt":"2017-11-07T18:46:27","slug":"define-indeminty-explain-essential-element-rights-indemnity-holder-sued","status":"publish","type":"post","link":"https:\/\/www.infipark.com\/articles\/define-indeminty-explain-essential-element-rights-indemnity-holder-sued\/","title":{"rendered":"Define ” Indeminty” and explain its essential element."},"content":{"rendered":"
Define ” Indeminty” and explain its essential element. What are the rights of an Indemnity holder, when sued ? <\/strong><\/h5>\n

Ans. Definition of Indemnity\u2013<\/strong>According to S.124-A contract of indemnity is 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. For Example \u2014<\/strong>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. Indemnity and Contingent Contracts\u2013it will be observed that a contract of indemnity is really a part of the general class of contingent contracts, It is an original and direct engagement between two parties whereby one promises to save another harmless from the result of the conduct of the promisor himselfor of any other person called indemnifier and the person to whom the loss is caused is called indemnity holder.<\/p>\n

Essentials of Contract of Indemnity-<\/strong><\/p>\n

1. Loss to promisee essential \u2014<\/strong>It will be seen from the wordings of S.124 that the promisee under a contract of indemnity must have suffered loss before he can hold the promisor liable on the contract of indemnity. The happening of the loss is the contingency on which the liability of the indemnifier springs into existence. For Example\u2014<\/strong>A agreed to act as a commission agent for B in certain transactions. B covenanted to indemnify A against any loss arising under the transactions. As a result of the transactions, A became liable to C and D to the extent of Rs. 10,000. A sued B to recover the said sum of Rs. 10,000 although he had not in fact paid to C or D. A is not, on the above ground, entitled to recover the sum of Rs. 10,000 from B.<\/p>\n

2. Consideration must be lawful\u2013<\/strong> It must be noted that the consideration or object of the contract of indemnity must be lawful. For Example –<\/strong> An agreement to indemnify the printer or publisher of a libel by the writer of the same cannot be legally enforced. Similarly, an agreement by an accused person or any other person to indemnify the person who has given bail is illegal and cannot be enforced.<\/p>\n

3. Indemnity may be express or Implied\u2013<\/strong>Although S. 124 section applies only to an express promise, yet a duty to indemnify may arise by operation of law in several circumstances. S.69 which deals with the “Quasi Contract”<\/strong> is one such example. Similarly, in the case of a sale of a Company’s shares, the transferor is bound to indemnify the transferee\u00a0against future calls on the shares transferred.<\/p>\n

Scope of Contingent Contract\u2013<\/strong>The definition of a contract of indemnity under this section is narrower than the one under the English law. According to S.124 the loss must have been caused either by the (i)conduct of the promisor or (ii) any other person. It does not include loss caused by natural factors not involving human conduct, like accidental fire, etc. But in English law, the loss might be caused by a human agency or by other natural factors also. Thus, Contracts of insurance, which are the commonest examples of contracts of indemnity under the English law, are not covered by the Indian Contract Act, according to which indemnity is restricted to those cases only in which the loss which is sought to be reimbursed, is caused by the conduct of the promisor or any other person. The loss must be such as the promisor has taken upon himself to indemnify.<\/p>\n

Rights of indemnity holder when sued\u2014According to S. 125 the indemnity holder i.e., the promisee) is entitled to recover from the promisor\u2014<\/p>\n

1. All damages-<\/strong>which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies.<\/p>\n

2. All costs\u2014<\/strong>which he may be compelled to pay in any such suit, \u2014(a) if in bringing or defending it.\u2014(i) he did not contravene the orders of the promisor, and (ii) he acted as it would bave been prudent for him to act in the absence of any contract of indemnity. (b) if the promisor authorized him to bring or defend the suit.<\/p>\n

3. All sums\u2014<\/strong> which he may have paid under the terms of any compromise of any such suit,\u2014(a) (i) if the compromise was not contrary- to the orders of the promisor, and (ii) was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity; (b) if the promisor authorized him to compromise the suit. It has been held that S..124 and 125 do not embody the whole of the Indian Law on the subject of contract of indemnity.<\/p>\n","protected":false},"excerpt":{"rendered":"

Define ” Indeminty” and explain its essential element. What are the rights of an Indemnity holder, when sued ? Ans. Definition of Indemnity\u2013According to S.124-A contract of indemnity is 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 […]<\/p>\n","protected":false},"author":35,"featured_media":3010,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46],"tags":[],"class_list":["post-2772","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-contract-2"],"_links":{"self":[{"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/posts\/2772","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/users\/35"}],"replies":[{"embeddable":true,"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/comments?post=2772"}],"version-history":[{"count":5,"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/posts\/2772\/revisions"}],"predecessor-version":[{"id":3160,"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/posts\/2772\/revisions\/3160"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/media\/3010"}],"wp:attachment":[{"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/media?parent=2772"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/categories?post=2772"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.infipark.com\/articles\/wp-json\/wp\/v2\/tags?post=2772"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}