A contract of indemnity is a contract in which one party (the indemnifier) agrees to compensate the other party (the indemnified) for any losses that the indemnified suffers.
Enforceability of Contract of Indemnity in Banking
The enforceability of a contract of indemnity in banking depends on a number of factors, including:
- The validity of the contract: The contract must be valid and enforceable under the law.
- The clarity of the contract: The contract must be clear and unambiguous.
- The reasonableness of the contract: The contract must be reasonable and fair.
- The public policy: The contract must not be against public policy.
MCQs on Enforceability of Contract of Indemnity in Banking
- Which of the following is not a factor that affects the enforceability of a contract of indemnity in banking?
- The validity of the contract
- The clarity of the contract
- The reasonableness of the contract
- The amount of the indemnity
- Answer: The amount of the indemnity. The amount of the indemnity is not a factor that affects the enforceability of the contract. The contract will be enforceable regardless of the amount of the indemnity.
- A bank enters into a contract of indemnity with a customer. The contract is not in writing. Is the contract enforceable?
- No, the contract is not enforceable. A contract of indemnity must be in writing to be enforceable.
- A bank enters into a contract of indemnity with a customer. The contract is clear and unambiguous. However, the contract is unreasonable and unfair. Is the contract enforceable?
- No, the contract is not enforceable. A contract of indemnity must be reasonable and fair to be enforceable.
- A bank enters into a contract of indemnity with a customer. The contract is clear, unambiguous, and reasonable. However, the contract is against public policy. Is the contract enforceable?
- No, the contract is not enforceable. A contract of indemnity that is against public policy is not enforceable.