CONTRACT OF INDEMNITY AND GUARANTEE (SECTIONS 124-147)Introduction
The contract of indemnity and contract of guarantee are specific types of contract. Thespecific provisions relating to these contracts are contained in sections 124 to 147 of the Indiancontract act 1872. In addition to these specific provisions, the general principles of contracts areapplicable of such specific contracts.
CONTRACT OF INDEMNITYMeaning of Indemnity
The term “indemnity “means to make good the loss or to compensate the party who hassuffered some loss.
Meaning of Contract of Indemnity:
A contract, by which one party promises to save the other from loss caused to him by theconduct of the promisor himself, or by the conduct of any other person, is called a “contract of indemnity”.
A contracts to indemnity B against the consequences of any proceedingswhich C may take against B in respect of a certain sum of Rs. 200 This is a contract of indemnity.
Meaning of Indemnifier:
The person who promises to make good the loss is called the indemnifier.In the above example, A is indemnifier
Meaning of Indemnity holder
The person whose loss is to be made good is called “indemnity-holder”In the above example, B is the indemnity-holder.The definition of contract of indemnity, as given in sec. 124 is not exhaustive. According to thedefinition, a contract of indemnity contains
Only express promises to indemnity &
Only those cases where the loss arises from the conduct of the promisor or of anyother persons.