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CAIIB Paper 4 BRBL Module D Unit 2 : Contracts Of Indemnity (New Syllabus)
IIBF has released the New Syllabus Exam Pattern for CAIIB Exam 2023. Following the format of the current exam, CAIIB 2023 will have now four papers. The CAIIB Paper 4 (BANKING REGULATIONS AND BUSINESS LAWS) includes an important topic called “Contracts Of Indemnity”. Every candidate who are appearing for the CAIIB Certification Examination 2023 must understand each unit included in the syllabus.
In this article, we are going to cover all the necessary details of CAIIB Paper 4 (BRBL) Module D (COMMERCIAL & OTHER LAWS WITH REFERENCE TO BANKING OPERATIONS) Unit 2 : Contracts Of Indemnity, Aspirants must go through this article to better understand the topic, Contracts Of Indemnity and practice using our Online Mock Test Series to strengthen their knowledge of Contracts Of Indemnity. Unit 2 : Contracts Of Indemnity
Contract Of Indemnity
- A Contract of Indemnity is a contract by which one party promises to save the other from loss likely to be caused to him. This loss can be, either by the conduct of the promisor himself or by the conduct of any other person.
- The promisor is called the indemnifier and the other person is called indemnified. The essence of any contract of indemnity is that the assured must prove a loss.
- Example: A contracts to indemnify B against the consequences of any proceedings which C may take against B in respect of a certain sum of 200 rupees. This is a contract of indemnity.
Rights Of Indemnity Holder
In terms of Section 125 of the Act which deals with extent of liability of the Indemnifier, the promisee is entitled to recover from the promisor/indemnifier, in respect of the matter to which the promise to indemnify applies:
- All damages which he may be compelled to pay in any suit, in respect of any matter to which the promise to indemnify applies.
- All costs which he may be compelled to pay in any suit if, in bringing or defending it, or if the indemnifier authorized him to bring or defend the suit.
- All sums paid in compromise, not contrary to indemnity.
- Right to sue for specific performance – the indemnity holder is entitled to sue for specific performance if he has incurred absolute liability and the contract covers such liability.
- A contract of indemnity may be express or implied depending upon the circumstances of the case, though Section 124 of the Indian Contract Act does not seem to cover the case of implied indemnity.
- An act is done by one person at the instance of another and such an act is not in itself manifestly tortuous to the knowledge of the person doing it, and such act turns to be injurious to the rights of a third person, the person doing it is entitled to an indemnity from him who requested that it should be done.
- Example: A broker in possession of a government promissory note endorsed it to a bank with forged endorsement. The bank acting in good faith applied for and got a renewed promissory note from the Public Debt Office. Meanwhile the true owner sued the Secretary of State for conversion who in turn sued the bank on an implied indemnity.
Enforceability Of Contract Of Indemnity
Commencement of Liability
- The Indian Contract Act 1872, does not specify, the actual time of commencement of the liability of the indemnifier. Therefore the judgements have been varied with some High Courts opining that the indemnifier is not liable till the actual loss has been incurred by the indemnity holder and others insisting that the indemnity holder can compel the indemnifier to make good the loss even before he actually discharges his liability by payment etc.
Specified Time for Notice
- Where notice has to be given to the indemnifier as per the terms of the indemnity, the indemnity holder has to abide by it, to be entitled to the claim.