Define
Indemnity and write down the right and duties of Indemnity holders.
Introduction
Indemnify
means to compensate or to make good of the loss and contract of indemnity means
a promise or statement of liability to pay compensation for a loss or a wrong
in the transaction. In the law of contract indemnity is the obligation,
undertaken by one party to cover the loss or debt incurred by another.
Indemnity is an assurance given by the promisor to promisee that he/ she will
make good or save from loss which is raised from their contract for example:
'Samsung' company agreed to make hardware for 'Apple' company, and it will be
responsible for the loss and make it for apple. If 'Samsung' sells the product
made for apple. In such a transaction, if any loss caused to 'Apple', whatever
may be the reason, 'Samsung' is bound to pay the compensation to 'Apple' and
Insurance contract. Who gives such assurance known as indemnifier and to whom
that assurance is given is known as indemnity holder or indemnified.
Right
and Duties of Indemnity Holder
The
indemnity holder is the party who has been assured of recovery of a loss by the
indemnifier. NCA 2056 has made the provision regarding the rights of an indemnifier.
The rights and duties of the Indemnity holder are given below:
Rights:
a)
Indemnity holder can claim for compensation for damages suffered from the
transaction. The indemnity.
the holder
can recover any or all of the amounts of compensation under the contract.
b)
He/She can recover all damages which he/ she may be compelled to pay in any
suit in respect of any matter to which the promise to indemnity applies.
c)
All the costs spent on the case filed or defended by him in connection relating
to indemnity.
d)
He/ She can recover all the cost of legal action if it becomes necessary to
initiate such an action for a failure to pay the amount mentioned in all the
above causes.
Along with such rights But the indemnifier
will not be liable for the loss in the following circumstances.
Duties:
a)
If He/ She works negligently.
b)
If he/she is acting intending to cause any loss or damage.
c)
If the indemnity holder is acting against the instruction of the other
party(Promisor).
note:
he/she means indemnity holder. ( when writing duties you must write eg.
Indemnity holders mustn't act and work negligently or something like that.)
Rights
and Duties of an Indemnifier
The
above duties or liability of indemnity holder is the right of indemnifier. Thus
the duties of indemnifier arise in the following circumstances:
i)
There must be a loss by the contract to make the indemnifier liable.
ii)
There must be an occurrence of the anticipated event. Without any occurrence of
the prescribed contingent event, there is no indemnity by the indemnifier.
iii)
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 cost demanded by the indemnifier is not caused by negligence, haphazard
behavior.
#Indemnity and Guarantee
Reviewed by Bijay Munikar
on
September 28, 2020
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