“A contract of Indemnity is a contract by which one party promises to save the other from the loss caused to him by the conduct of promisor himself, or by the conduct of any other person”.
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If Ram contracts to indemnify Rahim against the consequences of any proceedings which Shyam may take against Rahim in respect of certain sum of Rs 500? This is an example of contract of indemnity. A person who promises to make good the loss, i.e., promisor is called the indemnifier and person whose loss is to be made good, i.e., the promisee is termed as indemnity holder, or person who is indemnified.
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The promisee is protected and assured of being compensated for the loss if any arising out of the contract. To indemnify means to “save from loss” for which indemnity is offered, an essential of indemnity is viz, and contract of indemnity must be a valid contract. The indemnity holder must have suffered a loss. A suit on the indemnity lies within a period of three years.