Unit - 41 : Contacts of Indemnity A contact of indemnity is entered into when a party apprehends a loss in a particular contract and wants itself to be covered from the losses it may incur.
It may be Express or Implied . In Contact of Indemnity , The liability of an indemnifier is a stand alone primary obligation .
It is independent from and not contingent on any other party's liability to the indemnified party . The principle of co-extensiveness does not apply to indemnities .
An indemnifier will remain liable under an indemnity in relation to loss under a contract even if the underlying contract is void or unenforceable.
Banks in order to isolate themselves from adverse developments and consequent loss at a later date , obtain indemnity while duplicate demand drafts / Fixed Deposit Receipts , permitting operation in current account of partnership , etc .