Contract of Indemnity ?

 Meaning of Contract of Indemnity

A contract of indemnity is a legal promise where one person (the indemnifier) agrees to pay for or "make good" any losses suffered by another person (the indemnity holder) due to specific events or the actions of certain people.

Indemnity means “Security against loss”.

Example :- Imagine a software developer who signs a contract with a client to build a custom application. Within that contract, they include an indemnity clause. If a third-party company later sues the client, claiming that the software uses stolen code, the developer (the indemnifier) is legally obligated to pay for the client’s legal fees and any damages awarded by the court. In this paragraph-style scenario, the developer is "making good" the loss so that the client does not suffer financially for a mistake or legal issue created by the developer’s work.

According to Section 571(1) of National Civil Code Act 2074; 

“If a contract is concluded by which one party to the contract promises to save the other from loss or damage caused to him or her by the conduct of the promisor himself or herself or by the conduct of any other person working under the direction of such a party or loss or damage caused to such a party or third party by his or her conduct, the contract shall deemed to be a contract of indemnity."

According to Black’s Law Dictionary 

“Indemnity is an undertaking whereby one agrees to indemnify another, upon the occurrence of the anticipated loss.”

Thus, contract of indemnity means contract done between parties to save from future loss or and kind of accident, in which indemnifier need to pay the total legally loss of indemnity holder(to whom indemnifier done promise).