Indemnity
A legal obligation where one party agrees to compensate another for losses, damages, or liabilities.
What is Indemnity?
Indemnity is a legal obligation in which one party agrees to compensate or hold another party harmless for losses, damages, or liabilities arising from a specified event, contract, or action.
Why It Matters?
It allocates risk, protects against financial loss, and clarifies responsibility in contracts, insurance policies, and commercial agreements.
Example
A supplier agrees to indemnify a retailer for any product defects, covering costs of recalls or customer claims.
Related Terms
Mediation
Litigation