how to understand "right of recourse"?
Let's start with a case study
A factory is sued for its explosion which cause a lot of damage to ]factories, construction companies, architects, material suppliers, etc.
Before the verdict, the owner of the factory - one company - was acquired by another company. There is an indication clause in the acquisition agreement, which stipulates that the parent company of the acquired company shall compensate the buyer for the explosion losses.
A few years later, a judgment was made against all defendants, including the acquirer. The plaintiff applied for execution of the judgment, and the construction company fulfilled all the judgment debts.In the above case, the acquirer and the parent company of the acquired company are respectively Indemnitee and indexator of the index identification clause.
The buyer shall be liable for the plaintiff, and the parent company shall be liable for compensation to the purchaser.
This is a typical case of indemnitiation, that is, Indemnitee is held responsible by a third party because of the incident related to the indicator, and indexitor agrees (has the obligation) to compensate for the liability.
Let's look at contribution.
This word is commonly referred to as "the right of recourse.".
For example, if several people jointly infringe, one person can recover the corresponding share from other infringers after assuming the tort liability.
Back to the above case, if the construction company is fully liable, it can ask other defendants to contribute.
The buyer's share of this liability is obviously the loss to be covered by the index identification (without considering the lawyer's fees, etc.).
Compensation is involved in both indemnification and contribution. In the former, it is the indemnitor who compensates the Indemnitee; in the latter, it is the other infringer who compensates the infringer who has fulfilled all the responsibilities.
In practical cases, the relationship is complicated. If it is not explained in advance, it may not be easy to see the difference in the nature of the legal relationship between the two. Especially in the case of legal reasons for indemnification.
We know that as a term of the contract, the contract is agreed by the parties. However, for the sake of fairness, the British and American courts sometimes impose the obligation of indication. At this time, the boundary between indication and contribution will become a little fuzzy.
On the other hand, compensation should be made because of certain relationship between indication and contribution. It is obvious that the parent company owned the factory before, and the compensation commitment after the transaction negotiation. In contribution, it is the fact of joint infringement.
If it is legal identification, there is no compensation commitment, only simple facts (the parent company owns the factory, joint infringement), these two concepts are difficult to distinguish in some cases.