Implied indemnity is a legal term that refers to an obligation to compensate someone for a loss, even though there is no written contract between the parties. Implied indemnity can arise from the conduct of the parties or from the circumstances of the case.
In the context of banking, implied indemnity can arise in a number of situations. For example, a bank may be impliedly liable to indemnify a customer for losses that the customer suffers as a result of the bank’s negligence.
Here are some examples of implied indemnity in banking:
- A bank may be impliedly liable to indemnify a customer for losses that the customer suffers as a result of the bank’s negligence. For example, if a bank fails to properly secure a customer’s account and the account is then hacked, the bank may be liable to indemnify the customer for any losses that the customer suffers.
- A bank may also be impliedly liable to indemnify a customer for losses that the customer suffers as a result of the bank’s breach of contract. For example, if a bank agrees to provide a customer with a loan and then fails to provide the loan, the bank may be liable to indemnify the customer for any losses that the customer suffers as a result of the breach.
- In some cases, a bank may also be impliedly liable to indemnify a customer for losses that the customer suffers as a result of the customer’s own negligence. For example, if a customer fails to follow the bank’s instructions and the customer suffers a loss as a result, the bank may still be liable to indemnify the customer if the bank’s instructions were reasonable.
MCQs on Implied Indemnity
- Which of the following is not an example of implied indemnity in banking?
- A bank is liable to indemnify a customer for losses that the customer suffers as a result of the bank’s negligence.
- A bank is liable to indemnify a customer for losses that the customer suffers as a result of the bank’s breach of contract.
- A bank is liable to indemnify a customer for losses that the customer suffers as a result of the customer’s own negligence.
- A bank is liable to indemnify a customer for losses that the customer suffers as a result of a third party’s negligence.
- Answer: A bank is liable to indemnify a customer for losses that the customer suffers as a result of the customer’s own negligence. The bank is only liable to indemnify the customer for losses that are caused by the bank’s negligence or breach of contract.
- A bank fails to properly secure a customer’s account and the account is then hacked. The customer suffers a loss of Rs. 100,000. Is the bank liable to indemnify the customer?
- Yes, the bank is liable to indemnify the customer. The bank’s negligence in failing to secure the account caused the customer’s loss.
- A bank agrees to provide a customer with a loan but then fails to provide the loan. The customer suffers a loss of Rs. 100,000 as a result of the breach. Is the bank liable to indemnify the customer?
- Yes, the bank is liable to indemnify the customer. The bank’s breach of contract caused the customer’s loss.
- A customer fails to follow the bank’s instructions and the customer suffers a loss as a result. Is the bank liable to indemnify the customer?
- No, the bank is not liable to indemnify the customer. The customer’s negligence caused the customer’s loss, and the bank is not liable to indemnify the customer for losses that are caused by the customer’s own negligence.