This post is written by Arohi Ambade, a second-year law student of Maharashtra National Law University, Nagpur.
Title of the Case : Adamson v. Jarvis
Citation : 4 BING.66:29 R.R 503
Judgement Year : 1827
Adamson was an auctioneer who was given cattle by Jarvis. Here, the auctioneer was represented with the fact of principal that he was the real owner of the cattle as well as goods. The auctioneer was unaware of the fact that the principal had no right to sell the goods. According to the fact, the principal had to seek an indemnity of auctioneer. Indemnification, in simple words is to compensate for damages. Indemnity is considered to be contractual agreement between two parties whereby one party agrees to pay for potential losses or damages caused by another party as per Section 124 of the Indian Contract Act, 1872.
Jarvis was ordered to pay damages to Adamson. Adamson was entitled to recover the money he had to pay to the true owner of cattle as well as any expenses incurred by him. The obligation to indemnify is a voluntary obligation taken by the indemnifier. Adamson was allowed to follow the instruction and sold the cattle. But Jarvis was not the owner of the cattle. The real owner of the cattle sued Adamson for conversion and he was successful in his case. Adamson had to pay damages and he then sued Jarvis to be indemnified for the loss that he suffered by way of damages to be paid to the real owner. Section -125 of the Indian Contract Act, 1872 comes into play when the indemnity holder is sued, that is under a specific situation.
(1) Whether all the damages that indemnity holder have been compelled to pay in any suit in respect of any matter to which the promise if indemnifier applies?
(2) Whether Adamson was entitled to pay damages as he was completely unaware of the fact that Jarvis is not the real owner?
The Judgement of this case was that Jarvis was ordered to pay damages to Adamson as he did not tell the true fact about his ownership. It was held that the defendant was liable for loss of plaintiff and compels to compensate him as per Section-125 of the 2nd rule.
In this case, Adamson was entitled for the losses but afterward he can take the losses which were incurred to him from Jarvis. A suit can be filed immediately upon failure of performance irrespective of actual loss. Contract of indemnity should have all the essentials like free consent, loss to one party, the legality of an object, etc. Promise to compensate a party in case of likely loss or promise to pay for the losses to the other or indemnification of the losses. Indemnity always works in losses not with profit.