Contract of Indemnity | Indian Contract Act 1872 | CA Foundation
Channel: Learning With Nirmal
Date: 2023-03-05

This video talks about the following topics
The term indemnity means to make good the loss to compensate the party who has suffered some 
loss.
DEFINITION
Sec.124 of the Indian contract act defines a contract of indemnity thus, 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 person who 
promises to make good the loss is called the indemnifier. The person whose loss is to be made 
good is called the 'indemnity holder'
ESSENTIALS OF A VALID CONTRACT OF INDEMNITY
 1. The contract of indemnity must contain all the essentials of valid contract.
 2. It is contract between two parties one person promises to save the other from any loss, 
which he may suffer.
 3. The loss may be caused by the conduct of the promisor himself or any other person.
 4. The contract of indemnity may be express or implied.
RIGHTS OF INDEMNITY HOLDER
 l. All damages which he may be compelled to pay in any suit in respect of any matter to 
which the promise to indemnify applies.
 2. All costs which he may be compelled to pay, in bringing or defending such suit, if, he 
did not contravene the orders of the promisor, and acted as it would have been prudent for him to 
act in the absence of any contract of indemnity or if the promisor authorized him to bring or 
defend the suit.
 3. All sums which he may have paid under the terms of any compromise of any such suit, if 
the compromise was not contrary to the orders of the promisor, and was one which it would have 
been prudent for the promisee to make the absence of any contract of' indemnity or if the 
promisor authorized him to compromise the suit.


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