X, a trustee for Y of a policy of insurance, has funds in hand for payment of the premium. X neglects…
Illustration (f) to section 15 of the Indian Trusts Act, 1882 gives this example. A trustee who has funds to pay the premiums but neglects to do so must make good the…
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X, a trustee for Y of a policy of insurance, has funds in hand for payment of the premium. X neglects to pay the premiums. The policy of insurance is consequently forfeited. Select a correct statement arising out of this situation.
Answer and explanation
Correct answer D
Illustration (f) to section 15 of the Indian Trusts Act, 1882 gives this example. A trustee who has funds to pay the premiums but neglects to do so must make good the beneficiary's loss when the policy is forfeited. Section 23 states the general liability for a loss caused by breach of trust.
Option feedback
Option A
The trustee's duty to act prudently does not depend on a reminder from Y.
Option B
Y can claim compensation from the trustee for the loss caused by the breach.
Option C
Section 15, illustration (f), makes X answerable for the resulting loss.
Option D
X must make good Y's loss because the policy lapsed through X's neglect despite the available trust funds.
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