lawofcontract-iiindemnity contract-riya.pptx

ppt

1. CONTACT OF INDEMNITY PRESENTED BY: RIYA CHAUHAN PRESENTED TO: MRS. SHWETA GUPTA

2. Contract of Indemnity (Sec.124 & 125) Contract of Indemnity defined (S. 124) Sec. 124 defines a contract of Indemnity thus: “A contract of indemnity is a contract whereby one party promises to save the other from loss caused to him by the conduct of the promisor or any other person.”

3. Illustration – A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees. This is a contract of indemnity. If B is not the Principal Debtor, but only A makes a promise to the shopkeeper to pay, for instance, B tells the shopkeeper ‘Let him have the goods, I will be your paymaster’, it is contract of indemnity. - Birkmyr v. Darnell, (1704) 1 salk , 27 at 28.

4. Essentials Essentials There must be a loss. The loss must be caused either by promisor or by any other person. There are two parties – Indemnifier Indemnity-holder Must contain all the essentials of a valid contract.(Sec.10) Contract may be expressed or implied.

5. Person who promises to make good the loss is called the ‘indemnifier’ and the person to whom the promise is made, i.e., whose loss is to be made good is called the ‘indemnified’ or ‘indemnity-holder’.

6. Rights of Indemnity Holder (Promisee) when sued (Sec.125) T he rights of the indemnity holder are dependent on the terms of the contract of indemnity as a general rule. Sec-125 of the Indian Contract Act, 1872 comes into play when the indemnity holder is sued i.e. under specific situation.

7. All Damages – Sec.125 (1) All Costs – Sec.125 (2) All Sums – Sec.125 (3) Note - Limitation Act – 3 years time limit for recovery

8. Contd.. The indemnity holder is entitled to recover: a) the damages that he may have been compelled to pay in any suit in respect of any matter to which the promise of the indemnifier applies.

9. Contd.. For example, if A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a particular transaction. If C does institute legal proceeding against B in that matter and B pay damages to C, A will be liable to make good all the damages B had to pay in the case.

10. Contd.. b) All the costs of the suit that he may have had to pay to the third party provided he acted as a man of ordinary prudence and he did not act in contravention of the directions of the indemnifier or if he had acted under the authority of the indemnifier to contest such a suit.

11. Contd.. c) All the sums that he may have paid under the terms of any compromise of any such suit provided such compromise is not contrary to the indemnifier’s orders and was a prudent one or if he acted under authority of the indemnifier to compromise the suit.

12. Thank You