Akshita Sharma, Symbiosis Law School, Pune
A] Introduction
It is imperative to initiate with defining the Indian Contract Act, 1872 which primarily governs the rules and regulations related to forming, enforcing and terminating contracts. Defining the cardinal section of the contract act Section 124 which states “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.1” In simpler and broader terms, Indemnity serves as a form of reimbursement that safeguards you against possible damages. In its most extensive interpretation, indemnity pertains to providing financial compensation to an individual who has suffered a loss of money, possessions, or other assets resulting from the mistake of a third party. The second imperative section for this analysis is Section 125 of the Indian Contract Act, 1872 which states, “Rights of indemnity- holder when sued.—The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor— The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor2". In simpler terms, the above section implies to the rights of an indemnity-holder when they are sued for any loss, damage, or liability that they have incurred. In such a situation, the indemnity-holder, who is the person protected by the indemnity agreement, has the right to recover the amount of loss from the promisor, who is the party that provided the indemnity. Thus, this paper further elaborates on the shortcomings and suggestions in the statutory framework concerning the contract of indemnity.
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