Written by attorneys · grounded in primary & secondary sources — see below
A party entitled to receive indemnity from another for losses or liabilities incurred to a third person. The entitlement arises when the indemnitor bears primary responsibility for the harm and the indemnitee discharges a common liability that would otherwise unjustly enrich the indemnitor.
Apex Builders hired Metro Scaffolding to erect and maintain all scaffolding on a project. Debris fell from Metro's scaffold and injured a pedestrian who obtained a judgment against Apex based solely on vicarious liability. Apex paid the full judgment and then recovered the entire amount from Metro.
Insight Consulting directed its subcontractor Indigo Textiles to use a particular chemical process on fabric. Indigo followed the directions exactly and reasonably believed them lawful. When the process caused injury to a buyer, Insight paid the resulting judgment and recovered the full amount from Indigo.
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Interlink Communications purchased a security system from Imperial Motors after the seller assured that the access controls would prevent all data breaches. Relying on those statements, Interlink installed the system without further testing. A breach occurred, Interlink paid the customers' claims, and recovered the full amount from Imperial Motors.
Imperial Motors supplied defective brake components to Insight Consulting for use in vehicles. Insight failed to discover the defect during assembly. When a vehicle caused injury, Insight paid the judgment and recovered the entire sum from Imperial Motors.
Indigo Textiles created a hazardous chemical spill on land it leased from Insight Consulting. Insight failed to discover the condition. After a worker was injured and Insight paid the judgment, Insight recovered the full amount from Indigo Textiles.
Interlink Communications agreed by contract to protect Imperial Motors from all claims arising from use of the communications equipment. When a third party recovered a judgment against Imperial Motors, Interlink paid the judgment and recovered the full amount from Imperial Motors under the contractual duty.
Indemnity shifts the entire loss to the party bearing primary responsibility. Contribution apportions loss according to relative fault. When a right of indemnity exists, it displaces any right to contribution between the same parties.
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A party held liable only because another's conduct is imputed to it may recover full indemnity from the active wrongdoer after discharging the common liability. The rule prevents the active tortfeasor from retaining the benefit of the payment.
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Justifiable reliance exists when the indemnitee reasonably accepts the indemnitor's specific assurances without independent verification that industry norms would otherwise require. Failure to test when the misrepresentations directly induced the conduct supports recovery.
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The existence of a contractual right of indemnity between the parties bars any contribution claim between them. The contractual allocation controls and prevents equitable sharing that would undermine the indemnity promise.
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