CONTRACT

OF

BY

Dr. Priyanka
 Literal Meaning- Insurance, security or
Protection
 Relates to a suffering a loss
 Types of Loss-
1. Property
2. Accident
 INDEMNITY
INDEMNIFIER
HOLDER
PROMISOR
PROMISEE

PRINCIPAL AGENT

INSURANCE
POLICY
COMPANY
HOLDER
 • A contract by which one party
SEC 124 promises
• to save the other from loss caused
of to him
• by the conduct of the promisor
himself, or
Indian
’. Contract • by the conduct of any other person,
Act 1872 • is called a ‘contract of indemnity

• It is a promise to save
another person from the
loss caused as a result of a
ENGLISH LAW transaction entered into at
the instance of the
promisor.
 Special contract
Valid contract
 Restitution for damage, loss or injury.
 Indemnity by promisor
the reason of the contract should be
to protect the Indemnity holder from
future loss
 Reasons for loss should be accidental.
 Express
 Contingent contract
Express and Implied Contract
 Under Section 69 of the Indian Contract Act
 Under Section 145 of the Indian Contract
Act
 Under Section 222 of the Indian Contract
Act
 Adamson V. Jarvis 1872
 Gajanan Moreshwar V. Moreshawar
Madan
 Human Agency
 Earth Quake or Lightning fire
 Section 31 of The Indian Contract Act
 State of Orissa V. United Indian Insurance
Co. Ltd. 1997
 Tropical Insurance Co. Ltd. v. Zenith Life
Insurance Co. Ltd.,

 Whether LIC come under the purview of

Indemnity Contract or Not?
DAMAGES COSTS SUMS
 Duty to work prudently: Except otherwise is mentioned in the
contract, the indemnifier will not liable for the loss caused by
the negligence work of the indemnity-holder.

 Duty not to act to cause harm or loss: If the indemnity-holder

acting with the intention of causing any loss or damage, the
indemnifier will not liable for such loss.

 Duty to comply with the intention of promisor: If the indemnity-

holder acting against the instruction of the other party or
promisor, the indemnifier will not liable for the loss caused by
such against act to his instruction.
 Yeung V. HSBC
1. When does the indemnifier become
liable to pay?
2. When is the indemnity holder entitled to
recover his Indemnity?
1. Parker V. Levis
2. Gajanan Moreshwar V. Moreshwar
Madan
3. Shankar Nimbaji V. Laxaman Supdu- Has
suffered actual loss
 Praful Kumar V. Orient Insurance Co. Ltd.
Bona fide delay
Liable to pay compensation
 Broadly It’s divided into two categories
1. Express Indemnity
2. Implied indemnity
 “In uncertain economic times, where
all investors are diligent and risk averse
when choosing their investments,
weak indemnity protection in India
would make it an unattractive
investment destination.”