Bank Theory

Contracts of Indemnity - Bank Theory Contracts of Indemnity Definition of Contract of Indemnity According to Section 124 of the Indian Contract Act, 1872: "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." Distinctive Features of Indemnity and Guarantee Parties: Indemnity involves two parties (Indemnifier and Indemnity Holder); Guarantee involves three (Creditor, Principal Debtor, and Surety). Liability: Indemnifier's liability is primary; Surety’s liability is secondary in a guarantee. Trigger: Indemnity is for loss; Guarantee is for the default of a third party. Rights of an Indemnity Holder As per Section 125 of the Indian Contract Act, the indemnity holder is entitled to recover: A...