Question

Which type of loss are not covered by a contract of indemnity

• A. Loss arising from accidents like fire or perils of the sea
• B. Loss caused by the promisor himself or by a third person
• C. Loss arising by human agency
• D. None of the above

Hint:

Be aware that the Indian definition of indemnity (S.124) is narrower than the English law definition. In England, indemnity covers losses from any cause, including accidents. In India, the statutory definition is limited to losses from human conduct. However, Indian courts often apply the broader English principles in practice, especially for insurance contracts.

Answer 1

The Correct Option is A

Step 1: Understanding the Concept:
The question asks about the scope of a contract of indemnity as defined under the Indian Contract Act, 1872, and specifically, what kind of losses are excluded from this definition.
Step 2: Detailed Explanation:
\begin{itemize} \item Section 124 of the Indian Contract Act, 1872, defines a contract of indemnity as: "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..." \item Scope of the Indian Definition: This definition is quite narrow. It restricts the scope of indemnity to losses that are caused by human agency only (either the indemnifier or a third person). \item What is not covered: Consequently, the definition in Section 124 does not cover losses arising from accidents like fire, perils of the sea, or other acts of God, unless these events are caused by human conduct. \item Analysis of Options: \begin{itemize} \item (A) Loss arising from accidents like fire or perils of the sea: These are generally not caused by human agency and are therefore not covered by the strict definition in Section 124. \item (B) Loss caused by the promisor himself or by a third person: This is the exact wording of what is covered by Section 124. \item (C) Loss arising by human agency: This is another way of describing what is covered. \end{itemize} \end{itemize} Therefore, losses from accidents like fire (unless caused by a person) are not covered under the specific definition of indemnity in the Indian Contract Act.
Step 3: Final Answer:
The type of loss not covered is Loss arising from accidents like fire or perils of the sea.