CONTRACT OF INDEMNITY
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What is a contract of indemnity as defined under the Indian Contract Act, 1872?
A contract of indemnity is a contract by which one party promises to save the other from loss caused by the promisor's own conduct or by the conduct of any other person, as defined under Section 124 of the Indian Contract Act, 1872.
What is the primary purpose of a contract of indemnity in commercial transactions?
To protect a party against loss or damage caused by another
Who are the parties to a contract of indemnity?
The two parties are the indemnifier (the person who promises to indemnify) and the indemnity holder or indemnified (the person who is protected from loss).
Under which section of the Indian Contract Act is contract of indemnity defined?
Section 124 of the Indian Contract Act, 1872
Under Section 125 of the Indian Contract Act, what rights does the indemnity holder have after paying a claim?
The indemnity holder is entitled to recover from the indemnifier all damages, all costs of suit, and all amounts paid under any compromise, provided the compromise was not contrary to the indemnifier's instructions.
What is the maximum number of parties involved in a contract of indemnity?
Two parties: indemnifier and indemnity holder
When does the liability of the indemnifier commence in a contract of indemnity?
The indemnifier's liability commences as soon as the indemnity holder incurs an absolute liability, even if actual loss or payment has not yet occurred, as held in various Indian judicial precedents.
Who is called the indemnifier in a contract of indemnity?
The party who promises to compensate for loss
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