Q: A promises B to indemnify him against the consequences of any proceedings which C may take against B to recover a sum of Rs. 1,000 due from B to C. Is this a contract of indemnity?

Ans: Sec. 124 of the Indian Contract Act, 1872 defines Indemnity as a direct contract between two persons. Here one person promises to save another from loss. The loss is assured to be compensated by the promisor himself or by any other person.

The person who promises to make good the loss is called the Indemnifier (promisor) and the person whose loss is to be made good is called the Indemnified or Indemnity-holder (promisee) Thus, the promisee must incur a loss, if he has to be indemnified by the promisor.