CONTRACT OF INDEMNITY
INTRODUCTION
The word indemnity is derived from a Latin word indemins which means unhurt or free from loss. Section 124 of Indian contract Act, 1872 defines contract of indemnity. According to this section, a contract by which 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. The parties in the contract of indemnity are Indemnifier and Indemnity holder. Indemnifier is the person who promises to indemnify and Indemnity holder is the person to whom promise to indemnify is made.
ESSENTIAL OF THE INDEMNITY CONTRACT
There must be two parties, they are indemnifier and indemnity holder.
The contract of indemnity must contain all the essentials of a valid contract.
There must be loss of one party and promise of another party to protect him from the loss.
The contract of indemnity must be expressed or implied. Express means it must be made by words spoken or written and implied means that the conduct of the parties or circumstances of the particular case. Section 69 of Indian contract act is very good example of implied indemnity.
The example for implied indemnity is Adamson vs. Jarvis (1827), the fact of the case is that Adamson was an auctioneer, Jarvis approached Adamson for the auction of a cattle. But Jarvis was not the real owner. Adamson had to pay damage to the real owner and then he can sue Jarvis for the damage caused. Jarvis was ordered to pay damage to Adamson. In this case the implied indemnity is explained.
There must be a reason for the loss.
RIGHTS OF INDEMNITY HOLDER
Section 125 of the Indian contract act gives certain rights to the indemnity holder, they are:
Right to recover damages paid in a suit. The indemnity holder has the right to recover all the damages which he is compelled to pay in any suit in respect of any matter covered by the contract in indemnity.
Right to recover costs incurred in defending a suit.
Right to recover sums paid under compromise.
Right to sue for specific performance.
INSURANCE INDEMNITY
Every contract of insurance other than life and personal accident insurance are contract of indemnity. The definition (section 124) is restricted to cases where loss has been caused by some human agency. But now the insurer promise to indemnify is an absolute one which is held united India insurance co ltd vs. Kantika colour lab (2010).
CONCLUSION
In Gajanan Moreshwar parelkar vs. Moreshwar Madan Mantri, an observation was made by the judge that, if the indemnified has incurred a liability and the liability is absolute, he is entitled to call upon the indemnifies to save him from the liability and pay it off. In spite of its different arrangements, the Indian Contract Act of 1872 is as yet questionable with regards to indemnifier freedoms. In any case, the promisor isn't reduced by the absence of such an arrangement. These privileges depend on normal value and have a wide extension, and they are a significant part of repayment law. As indicated by Jaswant Singh v. Part of State, the indemnifier is to the repaid similarly that a bank is to the debt holder, that is the reimburse is qualified for the repayment protections holder's similarly as a leaser is to his significant borrower. It was concluded that the indemnifier's privileges are indistinguishable from those of a guarantee; a guarantee is qualified for the advantages of all protections claimed by the bank. It is sensible to accept that the expression reimbursement has both expansive and limited pertinence. The English idea of reimbursement is adequately expansive to cover a guarantee of repayment against misfortune happening from any reason, while the Indian Contract Act's definition is considerably more restricted. Somehow or another, Indian law on authoritative repayments has strayed from English law and taken its own course. Notwithstanding, their shared traits boundlessly dwarf their disparities.
By,
Asha Sebastian.
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