Contract of Indeminity:
“A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself or by the conduct of and other person, is called a contract of indemnity.”
In other words a contract where one person promise to compensate the other from the loss, which may arise due to the conduct of the promisor himself or any other person, is called a contract of indemnity.
Parties:
There are two parties to a contract of indemnity:
1. Indemnifier
2. Indemnity Holder
1. Indemnifier:
The person who promises to make good the loss is called the indemnifier (promisor).
2. Indemnity Holder:
The person whose loss is to be made good is called the indemnity holder or indemnified (promise).
Example:
1. A parked his scooter at the college scooter stands. He lost his token given by the contractor. The contractor refuses to return the scooter to A unless he (A) gives him an indemnity bond against any loss which he may suffer if any other person claims the scooter from the contractor.
2. A and B went to a shop. A says to the shopkeeper. ”Let B have the goods I shall see you are paid” It is contract of indemnity.