Indemnity Contract :-It is defined in the following words, "A contract by which one party promises to save the other from the loss caused to him by the contract of the promisor himself or by the conduct of other person."
Insurance contracts are the common examples of indemnity.
Example :- Mr. Jhon makes a contract of indemnity with Mr. Rymond against the consequences of any proceeding. Which Mr. Chand may take against Mr. Rymond in respect of certain sum of Rs. 100,000. The contract between Mr. Jhon and Mr. Rymond is called the contract of indemnity.
Parties :-
There are two parties involved in this contract. A person who gives the indemnity of protection to other person is called indemnifies. On the other hand a person whom protection is provided is called indemnity holder.
RIGHTS OF INDEMNITY HOLDER :-
Following are the important rights of indemnity holder :
1. Suit Expenditure Recovery :-
Holder has right to recover all the expenditure spent by him on suits defending his case. It is necessary that holder had acted according the direction of the indemnifies.
2. Rights of Loss Recovery :-
It is a right of the indemnity holder to recover all the losses for the indemnifies which he is compelled to pay in the related suit.
3. Compromise Cost Recovery :-
Under the terms of any compromise in such suit sometimes money is also paid. Holder is entitled to recover all the sum of money paid by him for this purpose.
4. Rights of Indemnifies :-
He is entitled to the benefit of all the securities which the creditor has against the principal debtor, whether he was aware of them or not?.
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Indemnity and Guarantee are a type of contingent contracts, which are governed by Contract Law. Simply put, indemnity implies protection against loss, in terms of money to be paid for loss. Indemnity is when one party promises to compensate the loss occurred to the other party, due to the act of the promisor or any other party. On the other hand, the guarantee is when a person assures the other party that he/she will perform the promise or fulfill the obligation of the third party, in case he/she default.
Contract of Idemnity Vs Guarantee
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Rights of Indemnity Holder
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