NARROW YET BROAD; CLEAR YET BLUR: THE LAW OF CONTRACT OF INDEMNITY IN INDIA

Abstract

The Contract of Indemnity is a wide used clause used frequently within the mercantile fraternity. However, the same has been down written in the Indian Contract Act under two sections, namely, 124 and 125. There is yet an ongoing dilemma whether the two clauses cover implied indemnity within its ambit and on when does the indemnity contract comes into play in favor of the promisee. Moreover, there is ambiguity on whether the term indemnity is synonymous to the terms such as damages, compensation, reimbursement and restitution. The following article distinctly attempts to resolve these obscurities. Furthermore, there are frequent mercantile disputes where the crystal yet coinciding line between indemnity, insurance and subrogation are blurred out. Therefore, the author comes up with a concentric circle mode of solution to resolve the entire vagueness of the Indian Contract of Indemnity, 1872. In addition to this, the author has also pointed out that despite the two sections being looked down upon as being a narrow scope of indemnity to be compatible with the transnational disputes; if the contemporary precedents being taken into account and the parent contract of indemnity is examined cautiously, the two plain sections are a massive ground to rely upon while resolving contemporary transnational as well as domestic trade disputes on indemnification. Lastly, the author recommends a few suggestions that can be taken into account while resolving the civil law disputes of indemnification in the contemporary era unless a massive amendment is undergone by Sections 124 and 125 of the Act, 1872.