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CIPS L5M2 Exam - Topic 4 Question 54 Discussion

Actual exam question for CIPS's L5M2 exam
Question #: 54
Topic #: 4
[All L5M2 Questions]

What is the purpose of an indemnity clause within a contract?

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Suggested Answer: C

Indemnity clauses transfer risk from one party to another. It is an arrangement whereby one party promises to compensate the other party for a trigger event. An example of an indemnity clause could be a construction firm is building a new bridge and the project is supposed to be completed by 1st June. An indemnity clause may state that should the bridge not be ready by this date, the construction firm will compensate the buyer by X amount. See p.61 for more information on indemnity.


by Reuben at Mar 21, 2025, 04:00 PM

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Jacinta
2 months ago
Nah, it's definitely more about risk transfer, not just insurance.
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Apolonia
2 months ago
Wait, isn't it also about assigning risk?
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Murray
3 months ago
Totally agree, option C is spot on!
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Mose
3 months ago
I thought indemnity clauses were just for insurance purposes?
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Brett
3 months ago
It's mainly about transferring risk from one party to another.
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Hubert
3 months ago
I feel like indemnity clauses are more about protecting against losses rather than just assigning risk. So, I’m leaning towards C, but I could be wrong.
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Maryanne
4 months ago
I practiced a question similar to this, and I think indemnity clauses are about ensuring one party covers the other’s losses, which sounds like C to me.
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Francine
4 months ago
I'm not entirely sure, but I remember something about assigning risk too. Maybe A is also a possibility?
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Shanice
4 months ago
I think the indemnity clause is mainly about transferring risk, so I might go with C.
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Curtis
4 months ago
Ah, I remember this topic from our last lecture. I think the indemnity clause is there to ensure both parties are adequately insured in case something goes wrong, so I'll go with option B.
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Domingo
4 months ago
Okay, I remember learning about indemnity clauses in my contract law class. I believe the purpose is to assign risk to each party, so I'll select option A.
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Rebbeca
5 months ago
Hmm, I'm a bit unsure about this one. I know an indemnity clause has something to do with risk, but I'm not sure if it's about assigning risk or transferring it. I'll have to think this through carefully.
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Yolande
5 months ago
I'm pretty sure the purpose of an indemnity clause is to transfer risk from one party to another, so I'll go with option C.
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Stevie
11 months ago
Indemnity clauses? More like 'I'm-not-gonna-pay-for-that' clauses, am I right? But in all seriousness, C is the way to go.
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Nenita
9 months ago
Yeah, indemnity clauses can be tricky, but C does make sense.
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Cristy
9 months ago
I agree, C is definitely the way to transfer risk.
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Rosalind
10 months ago
D is also crucial to explain what would happen in case of a force majeure.
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Loreen
10 months ago
B is important too, to ensure both parties are adequately insured.
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Vanesa
10 months ago
I think A is more about assigning risk to each party.
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Viola
10 months ago
I agree, C is definitely the way to transfer risk.
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Felice
11 months ago
I agree with C, but option B is also important. You want to make sure both parties are covered if something goes wrong.
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Winifred
11 months ago
I believe it's to ensure both parties are adequately insured if something were to go wrong.
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Brittni
11 months ago
I agree with Anissa, it's about transferring risk from one party to another.
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Nickie
11 months ago
Definitely option C. Indemnity clauses are all about shifting liability away from one party and onto the other.
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Brittni
11 months ago
Option C is the correct answer. The purpose of an indemnity clause is to transfer risk from one party to another.
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Sunny
10 months ago
Actually, it's to ensure both parties are adequately insured if something were to go wrong.
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Elbert
10 months ago
Yes, you're right. It's to assign risk to each party.
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Kirk
10 months ago
I think the purpose of an indemnity clause is to transfer risk from one party to another.
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Anissa
11 months ago
I think it's to assign risk to each party.
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Jesse
11 months ago
What is the purpose of an indemnity clause within a contract?
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