The Indemnity contract includes two parts namely; Indemnifier and holder of compensation. The person who promises to pay compensation is called the Indemnifier and the person whose loss is compensated is called the Indemnity holder.
Example: There is a contract between X and Y whereby X has to sell a recorder (which is selected) to Y after three months. The day after his contract, Z came to X and insisted on selling him the same recorder (Z). Here Z promises to compensate X for any loss X faces due to the sale of the recorder to Z. X has agreed. Now the contract that was formed between X and Z is called an indemnity contract, where Z is the indemnifier and X is the indemnity holder.
The person to whom the
compensation is granted, that is, the promise acting within the scope of his
authority, has the following rights against the promisor:-
(1) all damages that
you may be liable to pay in any lawsuit with respect to any matter to which the
promise to indemnify applies;
(2) all costs that you
may be required to pay in any lawsuit, if in filing or defending it you did not
violate the promisor's orders and acted as it would have been prudent to act in
the absence of any indemnity contract, or if the promisor authorized you to
file o defend the lawsuit;
(3) all the sums he
could have paid under the terms of any commitment of said claim, if the
commitment were not contrary to the promisor's orders, and it would have been
prudent for the fiancé to make in the absence of any indemnity contract, or if
the promisor authorized him to compromise the demand.
These are the legal
rights thus expressly provided by law. But the remedies provided in this
provision are not exhaustive as not all remedies are set forth here. This shows
that a certain area remains intact to obtain equitable reliefs.
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