State with reference to the provisions of the Indian Contract Act, 1872 whether the following are True or False with justification: (i) The pledge…

Provisions of Law: (i) Justification: According to Section 178 of the Indian Contract Act, 1872, a mercantile agent, who is in the possession of goods or document of title, with the consent of owner, can pledge them while acting in the ordinary course of business as a Mercantile Agent. Provided such Pledge shall be valid as if were made with the authority of the owner of goods and the Pawnee has acted in good faith and has no notice that the Pawnor has no authority to pledge. (ii) Justification: According to Section 210 of the Indian Contract Act, 1872, the termination of the authority of an agent causes the termination (subject to the rules herein contained regarding the termination of an agent's authority) of the authority of all sub-agents appointed by him. In the given question, B is the agent of A, and C is the agent of B. Hence, C becomes a sub agent. Thus, when A revokes the authority of B(agent), it results in termination of authority of sub agent appointed by B i.e. C (sub-agent). (iii) Justification: As per Section 124 of the Indian Contract Act, 1872, the term "Contract of Indemnity” is defined as “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." In case of a contract of insurance, the loss may happen due to natural calamities, and not due to conduct of the promisor or any person. Thus, a contract of Life Insurance is not contracts of indemnity as per definition given. Conclusion: (i) The given statement is False . A mercantile agent can validly pledge documents of title to goods with the owner's consent, provided they act in good faith and without notice of lack of authority. (ii) The given statement is False . The termination of the agent's (B's) authority by the principal (A) automatically terminates the authority of the sub-agent (C). (iii) The given statement is True . A contract of life insurance is not fully covered under the contract of indemnity because the loss (death) is not necessarily caused by the conduct of the promisor or any other person, which is a key element of an indemnity contract.