Section 77
Section 77
A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a “contract of indemnity”.
Illustration
A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of $200. This is a contract of indemnity.
Rights of indemnity holder when sued 78.
The promisee in the contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor —
(a)
all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;
(b)
all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promisor and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;
(c)
all sums which he may have been paid under the terms of any compromise of any such suit, if the compromise was not contrary to the orders of the promisor and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.
“Contract of guarantee”, “surety”, “principal debtor” and “creditor”