difference between indemnity and penalty
sneha
(Querist) 18 January 2010
This query is : Resolved
Can anybody tell me, what is the difference between Indemnity and penalty
prakash vathore
(Expert) 18 January 2010
hi,
sneha indeminity is undertaking given by the person to another stating that if any lose or anything worst happen then he will be liable to compensate the other,
penalty is fine for doing wrong.
A V Vishal
(Expert) 18 January 2010
A contract of indemnity is one whereby a person promises to save the other from loss caused to him by the conduct of the promisor himself or of any third person.For example,a shareholder executes an indemnity bond favouring the company thereby agreeing to indemnify the company for any loss caused as a consequence of his own act.The person who gives the indemnity is called the 'indemnifier' and the person for whose protection it is given is called the 'indemnity-holder' or 'indemnified'. A contract of indemnity is restricted to cover the loss caused by the promisor himself or by a third person.The loss must be caused by some human agency.Loss arising from accidents like fire or perils of the sea are not covered by a contract of indemnity.
In a contract, the parties may name a sum to be payable in the event of breach. If such sum is a genuine pre estimate of loss it is termed liquidated damages, and if it bears no reflection on the loss suffered, it is termed a penalty.
Sachin Bhatia
(Expert) 24 January 2010
An indemnity is a sum paid by A to B by way of compensation for a particular loss suffered by B.
A penalty is generally a punishment, and may refer to in law.
