Revisiting Sections 124 Along With 125 Of The Indian Contract Act, 1872
- IJLLR Journal
- 56 minutes ago
- 1 min read
Ruchi Rai & Mihika Singh, LLB, Symbiosis Law School, Pune
1. ABSTRACT
Indemnity contracts are important for risk-sharing in modern commerce. However, Sections 124 and 125 of the Indian Contract Act, 1872, remain confined to a rigid definition that fails to meet contemporary needs. This research paper critically examines these statutory provisions, identifying three major legal gaps that expose commercial parties to unjustified risk.
First, the Act fails to recognise implied contracts of indemnification. Second, it leaves the commencement of an indemnitor’s liability ambiguous. Third, the lack of clear statutory distinctions between indemnity and related concepts creates overlapping judicial rulings.
Using a comparative approach, the study contrasts Indian law with English Common Law. While English law (rooted in seminal cases like Adamson v. Jarvis) expands indemnity to encompass accidents, implied authority and vicarious liability, Indian law strictly limits it to losses caused by humans.
To resolve this doctrinal confusion, the paper introduces a novel "concentric circle" analytical model. By putting indemnity at the center and mapping related doctrines in successive outward circles, the model conceptually delineates the objectives of legal concept for clearer judicial reasoning.
Ultimately, the paper proposes statutory amendments to Sections 124 and 125. It recommends that the Act explicitly recognise implied indemnification, define clear thresholds for when liability commences, and expand the definition of indemnity beyond human conduct. These updates would transform an outdated law into a modern framework.
Keywords: Indemnity Contracts, Commercial Risk, Commencement of Liability.
