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===What an indemnity is=== | ===What an indemnity is=== | ||
“Why the excitement,” you might ask, “for isn’t an [[indemnity]] simply a promise to pay a defined sum should pre-agreed circumstances arise?” Quite so, if used as the Lords<ref>House of Lords, that is.</ref> intended. For an indemnity is a sensible way — perhaps the only way — to allocate the risks of [[externalities]] two merchants might encounter when faithfully providing one another goods and services. | “Why the excitement,” you might ask, “for isn’t an [[indemnity]] simply a promise to pay a defined sum should pre-agreed circumstances arise?” Quite so, if used as the Lords<ref>House of Lords, that is.</ref> intended. For an indemnity is a sensible way — perhaps the only way — to allocate the risks of [[externalities]] two merchants might encounter when faithfully providing one another goods and services. |