Understanding Rights and Duties of Indemnifier
Learn about the roles of indemnifier and indemnity holder in contracts, including their rights and duties. Explore examples and case laws to understand indemnity better, covering the concept of indemnification in various scenarios.
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RIGHTS AND DUTIES 0F INDEMNIFIER BY : AVANTIKA MAHAJAN
CONTENTS 1. Who is an INDEMNIFIER ? 2. INDEMNITY HOLDER 3. Contract of Indemnity 4. RIGHTS AND DUTIES Indemnifier Indemnity holder Case Laws Conclusion
INDEMNIFIER Indemnify Indemnifier is someone or something which protects against or compensates for the loss or damage.
Example Car insurance Anita buys a car and get the insurance done for her car and pays her premiums timely. After few months her car gets damaged due to an accident then she goes to the insurance company to compensate for the loss. Her car gets repaired by the insurance money. Here The Insurance Company is the Indemnifier.
INDEMNITY HOLDER The person whose losses the indemnifier promises to compensate or reimburse is called Indemnity Holder. Indemnified
Example Abhay contracts to indemnify Bobby against the consequences of any suit proceedings which Clara may take against Bobby in respect of a transaction of 1000 Ruppees. If Clara does initiate the legal proceeding against Bobby in that matter of transaction of 1000 Rupee and bobby was made to pay for the damages to Clara. Now, Abhay will be liable to indemnify or compensate Bobby for what Bobby had to pay in the case before. Here Abhay is the indemnifier and Bobby is indemnified.
Contract of Indemnity Indemnity Holder Indemnifier Contract Of Indemnity
Section 124 Contract of Indemnity One party promises to other party to make good its losses Losses may arise due to conduct of 1. Other party 2. Somebody s else. Contingent contract Commercial contract
RIGHTS AND DUTIES Indemnity is a right as well as a duty. 1. Duty:- It is duty to make good any Loss, damage or liability incurred by the another. 2. Right:- The right of an injured party to claim reimbursement for its loss, damage from a person who has such duty.
INDEMNIFIER INDEMNITY HOLDER RIGHTS AND DUTIES OF INDEMNIFIER AND INDEMNIFIED
RIGHTS OF INDEMNIFIER Indemnifier is not liable until the indemnified has suffered the loss. Indemnified can compel the indemnifier to make good his loss although he has not discharged his liability
RIGHTS OF INDEMNIFIER Alteration in terms and conditions of contract can lead to rejection of claim of reimbursement. In Bihal Chandra v. Chattur Sen (AIR 1976 ALL 506), where the seller had promised the purchaser to indemnify him against the fees, it was held, if any, that such indemnity clause would include only the existing fees and not those subsequently imposed, albeit retrospectively. Jaswant Singh v. Section of state Bombay,
DUTIES OF INDEMNIFIER As per Section 125 of the Indian Contract Act, 1872 the following rights are available to the promisee/ the indemnified/ indemnity-holder against the promisor/ indemnifier, provided he has acted within the scope of his authority. RIGHT TO RECOVER DAMAGES PAID IN A SUIT [SECTION 125(1)]: An indemnity-holder has the right to recover from the indemnifier all damages which he may be compelled to pay in any suit in respect of any matter to which the contract of indemnity applies.
DUTIES OF INDEMNIFIER RIGHT TO RECOVER COSTS INCURRED IN DEFENDING A SUIT [SECTION 125(2)]: An indemnity-holder has the right to recover from the indemnifier all costs which he may be compelled to pay in any such suit if, in bringing or defending it, 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.
DUTIES OF INDEMNIFIER RIGHT TO RECOVER SUMS PAID UNDER COMPROMISE [SECTION 125(3)]: An indemnity-holder also has the right to recover from the indemnifier 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 in the absence of any contract of indemnity, or if the promisor authorized him to compromise the suit.
CASE LAWS Sham sunder v. Chandu lal Ranganath v. Pachusao Gajanan Moreshwar v. Moreshwar Madan Chuni Bai v. Nathu Bai
CONCLUSION The essence of the contract of indemnity is the loss to the party, i.e. Indemnification can be done only if the loss is incurred to the other party, or if it is sure that the loss will incur.