Law · Indian Contract Act, 1872
A commercial bank issues a duplicate demand draft to a customer after the original was reported lost in transit. To protect itself from potential double payment, the bank obtains an indemnity bond. Under the Indian Contract Act 1872, what is the exact nature of the liability of the person signing this instrument?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The person is a guarantor whose liability is secondary and arises only if the primary debtor fails to pay.
- 2The person is an indemnifier whose liability is primary and independent, triggered immediately upon the bank suffering the loss.✓
- 3The person is a bailor who is responsible for the safe custody of the instrument.
- 4The person is an agent of the bank whose liability is limited to the transaction commission.
Correct answer
The person is an indemnifier whose liability is primary and independent, triggered immediately upon the bank suffering the loss.
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