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MARKS..

FRIDAY, MAY 15, 2009

Rights and duties of indemnifier

Rights of the indemnifier:

The rights of the indemnity-holder are the duties of indemnifier, and duties of the indemnity-holder are the
rights of the indemnifier. There are not prescribed any specific rights of the indemnifier either in Nepalese
law or in Indian law. However, he is not liable for indemnity.

i. If indemnity-holder acts negligently.

ii. If indemnity-holder is acting with the intention of causing any loss or damage.

iii. If he is acting against the instructions of the other party (promisor).

Duties of indemnifier:
The duties of an indemnifier arise in the following circumstances:

i. There must be a loss in accordance with the contract to make the indemnifier liable.

ii. There must be an occurrence of the anticipated event. Without any occurrence of the prescribed event,
there is no indemnity by the indemnifier.

diii. Where the right of indemnity is used by the indemnity-holder prudently and the instruction of the
indemnifier is not contravened or when there is no breach of contract.

iv. If the costs demanded by the indemnifier are not caused by negligence, haphazard behaviour.
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FRIDAY, MAY 15, 2009

Rights and duties of indemnity-holder

Rights of indemnity-holder [Sec. 22(1) of NCA]

A person whose loss is to be made good is called the indemnity-holder. He has some rights against the
indemnifier in accordance with the legal provisions incorporated under the Nepalese and Indian Contract
Acts. But, the duties of the indemnity-holder have not been mentioned under the Acts. The indemnity-
holder is entitled to recover any or all of the amounts of compensation under the contract. They are as

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follows:

i. All the indemnity amount (damage) prescribed in the contract.

ii. All the damages he may be compelled to pay a third party for the loss.

iii. All the costs spent on the case filed or defended by him in connection with the contract relating to
indemnity.

iv. All the costs of legal actions, if it becomes necessary to initiate such an action for a failure to pay the
amount mentioned in all the above clauses.

Duties of indemnity-holder

Except otherwise is mentioned in the contract, the indemnifier will not liable for the loss in the following
circumstances. They are called duties of indemnity-holder too.

i. Duty to work prudently: Except otherwise is mentioned in the contract, the indemnifier will not liable for
the loss caused by the negligence work of the indemnity-holder. In other words, it is the duty of indemnity-
holder to work prudently.

ii. Duty not to act to cause harm or loss: If the indemnity-holder acting with the intention of causing any loss
or damage, the indemnifier will not liable for such loss. In other words, it is the duty of indemnity-holder not
to act to cause harm or loss.

iii. Duty to comply with the intention of promisor: If the indemnity-holder acting against the instruction of the
other party or promisor, the indemnifier will not liable for the loss caused by such against act to his
instruction. In other words, it is the duty of indemnity-holder to comply with the intention of promisor.
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Rights of Indemnity Holder When

Sued:

ã
 


 /Paid by him.
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ãan recover costs incurred.

ãan recover sums paid under
compromise, if
any.
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Kinds Of Guarantee.
‡Specific Guarantee or (Ordinary
Guarantee).
--this guarantee is restricted to a
specific transaction or engagement.
For example availing a loan from a
bank.
‡ãontinuing Guarantee:

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--Such guarantee covers a series of

transactions.
For example guarantee furnished to a
supplier
for making supplies during the next
one year.
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