Template:Indemnity description

An indemnity is an undertaking by an indemnifying party to compensate an indemnified party for losses the indemnified party suffers beyond those arising as a direct consequence of the indemnifying party's failure to perform its obligations under the contract containing the indemnity. Indemnities are generally viewed as onerous obligations. A request for one will often be met with a sharp intake of breath.

An indemnity is nonetheless a useful back-up to a guarantee because:

• The Statute of Frauds does not apply to an indemnity.
• The invalidity of an underlying obligation does not invalidate an indemnity.
• Variation of the terms of an underlying obligation will not discharge an indemnity whereas it might a guarantee (unless you have a good waiver of defences clause)