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Contract of Indemnity (Section 124)

This document summarizes key aspects of a contract of indemnity under Section 124 of Indian law. A contract of indemnity involves one party promising to save the other from any loss caused by the promisor or a third party. The promisor is called the indemnifier and the promisee is the indemnity holder. An example given is an insurance company. The rights of the indemnity holder include recovering damages, defense expenses, and amounts paid in an out-of-court settlement. The indemnifier's liability begins when the indemnity holder's liability becomes absolute, even if the indemnity holder has not yet paid.

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Carry Minati
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174 views4 pages

Contract of Indemnity (Section 124)

This document summarizes key aspects of a contract of indemnity under Section 124 of Indian law. A contract of indemnity involves one party promising to save the other from any loss caused by the promisor or a third party. The promisor is called the indemnifier and the promisee is the indemnity holder. An example given is an insurance company. The rights of the indemnity holder include recovering damages, defense expenses, and amounts paid in an out-of-court settlement. The indemnifier's liability begins when the indemnity holder's liability becomes absolute, even if the indemnity holder has not yet paid.

Uploaded by

Carry Minati
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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CONTRACT OF INDEMNITY (SECTION 124)

• Indemnity – TO SAVE OR PROTECT FROM LOSS.


• ACC TO sec 124-
• One party promises to save the other
• from loss caused to him
• by the conduct of promisor himself or by the conduct of any
other person
• is called CONTRACT OF INDEMNITY.
• It is a type of CONTINGENT CONTRACT whose purpose is to protect the
promisee from anticipatory loss.
• Person who promises to save the other party from the loss is called
INDEMNIFIER.
• The person to whom such promise made is called INDEMNITY HOLDER.

• EXAMPLE- Insurance Company.


Rights of Indemnity Holder (sec-
125)
• Example- A sells his house to B. A agrees to indemnify B if the title of
house is found to be defective. Later, C claims the title of house & sues B
for trespass.
• B WILL HAVE FOLLOWING RIGHTS:
• 1- recover damages
• 2- Recover expenses for defending suit against him.
• 3- Recover any amount paid under compromise{out of court settlement}
Time of commencement of indemnifier’s
Liability (sec 125)
• COURTS HAVE HELD THAT:
1- Indemnifiers may be called upon to pay even before the indemnity holder has discharged his
liability.
2- Provided the indemnity holder’s liability should have become absolute.
THIS MEANS:
Indemnifier does not need indemnity holder to pay first & then he will be reimbursed by the
indemnifier.
FOR EXAMPLE-
A indemnifies B against any legal action that C may take against B
C files a suit against B
&B is asked to pay 50,000 rs to C by court.
Here A may be required to pay directly to C
without having B pay first.

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