Indemnity, Injunction and Damages

Position of Damages, Injunction and Indemnity under Indian Contract Act

and Specific Relief Act

Damages

The concept of Damages has been provided under Section 73 of The Indian
Contract Act, 1872, The statute encourages parties to a contract to comply with
their respective obligation and instinctively frowns upon a breach by either party.
Thereby, as soon as either party commits a breach of the contract the law gives to
the other remedies one is entitled to obtain
➢ Damages for the loss incurred
➢ A decree for specific performance
➢ And an injunction

Injunction

Whereby under Section 37(2) of Specific Relief Act- A injunction can only be
granted by the decree made at the hearing and upon the merits of the suit the
defendant is thereby perpetually prevented from the assertion of a right, or from
the commission of an act, which would be contrary to the rights of the plaintiff.

It has been established that while seeking to execute an injunction, the plaintiff
must do so with clean hands.The court maintains broad discretion in granting or
refusing an injunction. The remedy cannot be acquired as a matter of right, no
matter how compelling the applicant's claim is. The discretion to issue an
injunction must consequently be used with extreme caution, evaluation, and regard.
It is an unique ability that carries the possibility of inflicting losses or
disadvantages on the innocent person. As a result, the award of an injunction is not
definitive.

Indemnity
Concept of Indemnity has been outlined under Section 124 of The Indian Contract
Act, 1872 where it clearly states that, “A contract by which one party promises to
save the other from loss caused to him by the contract of the promisor himself or
by the conduct of any other person is called a contract of indemnity”

Indemnity contract can be deemed a kind of contingent contract, as there is a direct

engagement between two parties whereby one promises to compensate the other
against the losses incurred by the promisor or of any other person. The promisor is
regarded as indemnifier and the individual to whom the promise is made is
identified as indemnity holder.

Since a contract of indemnity is a form of contract itself it is pertinent to

acknowledge that all the the requisites of a valid contract would also be
considered, for instance conditions such as:-

➢ Loss to promisee is essential

➢ There must be an offer and acceptance
➢ Consideration and object must be lawful
➢ There must be free consent
➢ The parties involved should be competent to enter into contract
➢ There should be no coercion, undue influence, fraud or any kind of
misrepresentation
➢ There must be a promise to do or not to do something
➢ Indemnity may be expressed or implied

The Difference Indemnity and Damages make in commercial contract

The primary objective of indemnity is to restore the original position before loss
however damages awarded may be more than actual loss sustained.

Both indemnity and damages have their own pros and cons depending on the
subject matter in question. If there is a possibility where the damage can be caused
by agreement but the nature of damage is such where need to claim the amount is
more than the actual amount, including damages, indemnity cannot be claimed to
cover the loss unless loss has actually occurred.
If the claim may arise even without any breach of contract then it should be
included in indemnity as damages can only be claimed for the breach of contract.