What is indemnity? It means "security or protection against loss". Thus by combining the meaning of contract and indemnity, we can understand what is contract of indemnity.
The contract in which a person promises to protect the other from loss likely be caused is called contract of indemnity. Who are all the parties in the contract? Indemnifier and Indemnity holder.
The person who makes the promise ( promisor) is called indemnifier and the person to whom the promise is made or the person who is holding the promise is called indemnity holder.
Let's see the rights of the indemnity holder
Section 125 of The Indian contract act, clearly reveals the rights of the promisee i.e., indemnity holder which he can claim from the promisor i.e., indemnifier
1. All damages which the indemnified is compelled to pay in any suit to which the indemnity promise applies.
2. All sums paid in compromise, not contrary to indemnity
3. The liability which is incurred by the indemnified, which the contract covers it.
4. All costs which the indemnified is compelled to pay in any suit, in bringing or defending the suit, which the indemnifier authorized indemnified to do so.
The contract of indemnity may be express or implied. The liability of the indemnifier starts as soon as the loss of indemnified becomes imminent. It is not the indemnified to pay for the loss.
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