Contracts of Indemnity: Jaiib/DBF Paper 3 (Module D) Unit-2

Contracts of Indemnity: Jaiib/DBF Paper 3 (Module D) Unit-2

Dear bankers,

As we all know that is Contracts of Indemnity for JAIIB Exam. JAIIB exam conducted twice in a year. So, here we are Contracts of Indemnity (Unit-2), Commercial Laws with Reference to Banking Operations (Module D), Legal & Regulatory Aspects of Banking -Paper 4.

♦About

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.

♦Rights Of Indemnity Holder

The indemnity holder (i.e. the promisee or the person who is indemnified) has the following rights when sued (i.e. when a legal action is taken against the person who has indemnified).

The promisee is entitled to recover from the promisor, 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.
  • 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.

Implied Indemnity

  • A Contract of indemnity may be express or implied depending upon the circumstances of the case, through section  124 of the India Contract Act does not seem to cover the case of implied indemnity.

Enforceability of Contract of Indemnity

  • The Liability of the Indemnifier commences as soon as the loss of the indemnified becomes absolute, certain or imminent. It is not necessary that the promise should pay for the loss.

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