What is contract of indemntiy ? (2024)

FAQs

What is contract of indemntiy ? ›

An indemnity agreement is a contract that protects one party of a transaction from the risks or liabilities created by the other party of the transaction. Hold harmless agreement, no-fault agreement, release of liability, or waiver of liability are other terms for an indemnity agreement.‌

Section 124. " Contract of indemnity" defined Previous Next. 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 any other person, is called a contract of indemnity. Illustration.

Indemnity is a contractual agreement between two parties in which one party agrees to pay for potential losses or damage caused by another party.

To indemnify, also known as indemnity or indemnification, means compensating a person for damages or losses they have incurred or will incur related to a specified accident, incident, or event.

An indemnification clause is a legally binding agreement between two parties specifying that one party (the indemnifying party) will compensate the other party (the indemnified party) for any losses or damages that may arise from a particular event or circ*mstance.

For example, A promises to deliver certain goods to B for Rs. 2,000 every month. C comes in and promises to indemnify B's losses if A fails to so deliver the goods. This is how B and C will enter into contractual obligations of indemnity.

Indemnity insurance is a type of insurance policy where the insurance company guarantees compensation for losses or damages sustained by a policyholder. Indemnity insurance is designed to protect professionals and business owners when found to be at fault for a specific event such as misjudgment.

Indemnification is protection against loss or damage. When a contract is breached, the parties look to its indemnity clause to determine the compensation due to the aggrieved party by the nonperformer. The point is to restore the damaged party to where they would have been if not for the nonperformance.

It's a legally binding promise to protect another person against loss from an event or series of events: they are indemnified and protected from liability. Sometimes, indemnities are implied into the terms of contracts automatically, due to the nature of the legal relationship between the two parties.

The rule of indemnity, or the indemnity principle, says that an insurance policy should not confer a benefit that is greater in value than the loss suffered by the insured. Indemnities and insurance both guard against financial losses and aim to restore a party to the financial status held before an event occurred.

Is indemnity good or bad? ›

There's nothing inherently wrong with having an indemnity that can apply to claims between the parties—if that's what the parties intend. But if the parties want the indemnity to apply only to third-party claims, they can say so in the contract.

What is Principle of Indemnity? The principle of indemnity governs that an insurance contract compensates you for any damage, loss or injury caused only to the extent of the loss incurred. Insurance contract ensures that the insurer does not make a profit in the event of an incurred loss.

An indemnification provision serves as a contractual remedy to redress a party's (or third party's) financial loss suffered as a result of a claim, breach, or some other event or condition set forth in the provision. Indemnification serves as a risk allocation mechanism derived originally from insurance law.

An indemnity clause is a contractual clause providing that one party is responsible for any losses or damages arising from a certain event or set of circ*mstances. In effect, the indemnity clause shifts the risk of that event occurring from the indemnified party to the indemnifying party.

Indemnities are often included in IT contracts as a way of allocating liability between the customer and the supplier. Depending on how it is drafted, an indemnity can offer broader protection and certainty to the indemnified party compared to simply relying on a claim for damages under a breach of contract.

An indemnity clause is a contractual transfer of risk between two or more contractual parties generally to prevent loss or compensate for a loss which may occur as a result of a specified event.

An indemnity clause is a contractual clause providing that one party is responsible for any losses or damages arising from a certain event or set of circ*mstances. In effect, the indemnity clause shifts the risk of that event occurring from the indemnified party to the indemnifying party.

Therefore if the relevant event occurs before the contract is terminated, the indemnity clause is usually considered an enduring provision and one party is still obligated to indemnify the other even after termination of the contract.

An indemnity is a contract by one party to keep the other harmless against loss, but a contract of guarantee is a contract to answer for the debt, default or miscarriage of another who is to be primarily liable to the promisee.