Legal and Regulatory

3. The indemnity holder is entitled to

Environment of (a) All damages that he may be compelled to pay in any suit in respect of any
Business matter to which the promise to indemnity applies
Notes (b) All costs that he may be compelled to bear in bringing or defending any
such suit
(c) All sums that he may have paid under the terms of any compromise of such
suit
(d) All of the above
4. Who among the following can make a valid pledge?
(a) The owner or his authorized agent
(b) A mercantile agent who with the consent of the owner is in possession of
goods or documents of title to goods
(c) A person having limited interest
(d) All of the above
5. Which of the following transactions does not fall in the ambit of bailment?
(a) Delivering goods for carriage
(b) Delivering goods for repair with or without remuneration
(c) Placing of ornaments in a bank locker
(d) Delivering goods to a creditor to serve as security of loan
6. The pawnee can retain the goods pledged for
(a) Payment of the debt or performance of the promise
(b) Interest on the debt
(c) All necessary expenses incurred by him in respect of the possession or for
preservation of the pledged goods
(d) All of the above
7. The relationship of principal and agent may be created by
(a) Express or implied offer (b) Ratification
(c) Operation (d) Any of the above
8. Implied agency includes
(a) Agency by estoppel (b) Agency by holding out
(c) Agency by necessity (d) All of the above
9. The crucial test of agency is that
(a) A person possessing capacity to contract may lawfully do by himself or he
may get it done by another
(b) He who acts through an agent is himself acting
(c) Acts of the agent bind the principal
(d) The principal is not responsible if the agent exceeds his authority
10. Agency is irrevocable
(a) Where the agent has an interest in the property that forms the subject
matter of the agency
(b) Where the agent has partly exercised his authority
(c) Where the agent has incurred a personal liability
(d) In all the above cases
II. Review Questions
1. What is a ‘contract of indemnity’? Bring out difference between a contract of
indemnity and a contract of guarantee.
2. State the rights of surety against
(i) The principal debtor
(ii) The creditor, and
(iii) Co-sureties
3. ‘Between co-sureties there is equality of burden and the benefits.’ Elaborate.
Self-Learning
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