Contract of Indemnity

Introduction:             Contract of indemnity is one of the species of general contract, therefore the general principles of law of contract is applicable to it. Chapter VIII Section 124 and 125 of Indian Contract Act, 1872 deals with the provisions of indemnity.  The term 'Indemnity' is used in law in many senses.  In English law the term 'Indemnity' means 'a promise to save a person harmless from the consequences of the act'.  The promise may be express or implied as per the nature of circumstances.

Definition:                  Section 124: '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'

Parties of Indemnity Contract:

                                    There are two parties for indemnity contract that are as follows

1. Indemnifier – He is the person who promises to make good the loss. He is also called as the promisor.
2. Indemnity Holder – He is the person to whom the promise of indemnity is given. He is the person whose loss is to be compensated, is also called as promise.

Ingredients of Indemnity:

1. Contract of indemnity is a contract,
2. one party promises the other,
3. Promise relates to save the other party from the loss caused to him,
4. Loss caused May be by the-
   1. Conduct of the promisor himself; or
   2. Conduct of any other person.

Conclusion:                A contract of indemnity is not exhaustive.  A contract of indemnity is in real sense a kind of contingent contract, it is a special contract, It is a promise to save one from losses caused to him by the conduct of promise or any other person.  There are two parties and only one contract.  The liability of the indemnifier arises only on the happening of contingency.  The English law of indemnity is wider that Indian Law.