KSLU Solved Question Papers
Contract II
Previous Year Question Paper with Solution
B.A. LL.B. (Five Years) · Sem 5
2019 Jun Examination
munotes.in
Mumbai
B.A. LL.B. (Five Years) Sem 5 Contract II 2019 Jun Question Paper with Solutions
First published on munotes.in on 21 October 2026.
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The question paper reproduced here is the paper as set by Karnataka State Law University at the 2019 Jun examination.
Contents
The questions below are the paper as Karnataka State Law University set it at the 2019 Jun examination, in the order it was set.
MarksPage
MarksPage
The Paper as Set
The questions in this volume are the questions asked at the 2019 Jun examination, reproduced as Karnataka State Law University set them, in the order it set them. Long reading passages are shortened to their first and last lines and our summary; the original paper prints them in full. Only the answers are ours. See the original question paper.
Duration 3 hours · Total marks 80 · 20 questions answered
Instructions printed on the paper
- N.B. (1) Answer all five Units. (2) One essay type question and short-note/problem are compulsory from each Unit. (3) Figures to the right indicate marks. (4) Answer should be written either in English or Kannada completely.
How to use this volume
Solve the paper first, under exam conditions and against the clock. Then read the answers here and mark your own. Reading a solution before attempting the question feels productive and teaches very little, because recognising an answer is not the same as being able to write one.
Q1
Unit I
(a)Define contract of indemnity and what are the rights of an indemnity holder ?[10]
Answer
For full marks, cover: the definition in section 124 and its illustration; the nature of the contract (two parties, conduct, express or implied); the three rights of the indemnity holder when sued under section 125 and their conditions; when the indemnity can be enforced (Gajanan Moreshwar, Osman Jamal); rights at common law (Adamson v. Jarvis); a short table.
Definition
Section 124 of the Indian Contract Act 1872 reads: "A contract by which one party promises to save the other from loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a contract of indemnity."
The illustration gives an example. A contracts to indemnify B against the consequences of any proceedings which C may take against B for Rs 200. That is a contract of indemnity.
The promisor is called the indemnifier. The promisee is the indemnity holder.
Nature of the contract
- Two parties. Only the indemnifier and the indemnity holder are involved. There is no third person whose debt is secured.
- A valid contract. All the essentials of section 10 apply: free consent, competent parties, consideration and a lawful object.
- Loss caused by conduct. Section 124 covers loss caused by human conduct. Loss from an accident or an act of God, as in fire insurance, falls outside this section. Such a promise is still valid under the general law of contract.
- Express or implied. The promise may be in words, or may arise from the circumstances. An agent's right to indemnity under sections 222 and 223 is an example of an implied indemnity.
- Primary liability. The indemnifier's promise does not depend on anyone else's default.
Rights of the indemnity holder when sued: section 125
Section 125 gives the indemnity holder, "acting within the scope of his authority", three rights against the indemnifier.
- Damages. He may recover "all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies".
- Costs. He may recover all costs he is compelled to pay in such a suit. He must not have disobeyed the indemnifier's orders, and must have acted as a prudent man would without an indemnity. Alternatively, the indemnifier must have authorised him to bring or defend the suit.
- Sums paid under a compromise. He may recover sums paid under a compromise of the suit. The compromise must not be against the indemnifier's orders, and must be one a prudent man would make. Or the indemnifier must have authorised it.
The section's own text in the official copy prints "The promise" as its subject. Its heading, "Rights of indemnity-holder when sued", shows that the promisee is meant.
When the right can be enforced
The English rule was that the indemnity holder must first pay the loss before suing. Indian courts have not followed this strictly.
Gajanan Moreshwar Parelkar v. Moreshwar Madan Mantri, AIR 1942 Bom 302, is the leading case. At the defendant's request, the plaintiff mortgaged property and made himself personally liable. The defendant promised to clear the mortgages but did not. He argued that the plaintiff had paid nothing yet and so had no claim. Chagla J rejected this. Sections 124 and 125 are not exhaustive. If the indemnity holder's liability has become absolute, he may compel the indemnifier to discharge it before paying himself. Otherwise an indemnity would be of little use.
Osman Jamal and Sons Ltd. v. Gopal Purshottam (Calcutta High Court, 1929) reached the same result. A commission agent bought hessian for the defendants on their promise of indemnity. The defendants did not take delivery. The seller resold at a loss and claimed it from the agent. The agent was allowed to recover from the defendants before it had paid the seller.
Rights outside section 125
The common law and equity still apply. Adamson v. Jarvis (1827) 4 Bing 66 shows an indemnity implied by law. The defendant told an auctioneer to sell cattle, falsely claiming to own them. The true owner sued the auctioneer and recovered damages. The auctioneer recovered his loss from the defendant, because he had acted in good faith on the defendant's request.
Summary
| Right | Source | Condition |
|---|---|---|
| Damages paid in a suit | Section 125(1) | Suit within the indemnity |
| Costs of the suit | Section 125(2) | Obeyed orders and acted prudently, or authorised |
| Compromise sums | Section 125(3) | Prudent compromise, or authorised |
| Relief before payment | Gajanan Moreshwar | Liability has become absolute |
| Implied indemnity | Adamson v. Jarvis | Act done in good faith at the other's request |
Conclusion. A contract of indemnity under section 124 is a two-party promise to save the other from loss caused by conduct. When sued, the indemnity holder may recover damages, costs and compromise sums under section 125, provided he acted within his authority and prudently. Gajanan Moreshwar and Osman Jamal allow him to enforce the promise once his liability is absolute, before he pays. Adamson v. Jarvis shows that the law may also imply such a promise.
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