A contract of indemnity is defined as a contract where one party promises to save the other from loss caused by the conduct of the promisor or a third party. Key elements include an indemnifier who promises to make good any loss, and an indemnified party whose loss will be compensated. A contract of insurance is an example of an indemnity agreement. The indemnified party is entitled to recover damages, costs, and sums paid under any compromise from the indemnifier once a loss event has occurred. However, a life insurance contract is not considered an indemnity because a person's life cannot be replaced or valued in the same way as property.

1. ContraCt of
IndemnIty
Course: LLB II
Subject : Special Contracts
Unit: I

2. Contract of indemnity
• According to section 124 of the Indian
contract act 1872,
• 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

3. Contract of indemnity
• A contract of insurance is an example of a
contract of indemnity .
• In consideration of a premium the insurer
promises to make good the loss suffered by
the assured on account of the destruction by
fire of his property insured against fire.

4. Parties to contract of indemnity
• The person who promises or makes good the
loss is called the indemnifier (promisor) and
• the person whose loss is to be made good is
called the indemnified or indemnity holder
(promisee)

5. Contract of indemnity
• However the contract of life insurance does
not come under the category of contract of
indemnity. This is because the life of a person
cannot be valued and replaced

6. Rights of indemnity holder
• The promisee in a contract of indemnity is
entitled to recover from the promisor
• All damages within the scope of the terms of
the indemnity
• All costs which he may be compelled to pay in
any such suit if, in bringing or defending it
• All sums to be paid under the terms of any
compromise of any such suit

7. ESSENTIAL FEATURES OF
INDEMNITY
 There are two persons , the indemnifier
the indemnified or the indemnity holder
 There must be loss either by the
promisor’s conduct or by any other
person’s conduct
 It is a contingent contract by nature
 It may be express or implied
Sec125 deals with the commencement
of the indemnifier’s liability. His liability
commences when the event causing the
loss occurs or when the event saving the
indemnified from the loss becomes
impossible

8. essentials
• Essentials
• (i) Contract of indemnity must contain all the
essentials of a valid contract.
• (ii) The promisee or the indemnity-holder
must have suffered a loss.

9. Rights
• Rights of indemnity-holder: (Sec. 125)
• 1. Damages
• 2. Costs
• 3. All sums
• 4. Suit for specific performance

10. References
• Avtar Singh : Contract Act, Eastern
• Beatson : Anson's Law of Contract, Oxford

11. Thank You