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| {{Indemnity description}} | | {{Indemnity description}} |
| ===Usage=== | | ===Who uses them?=== |
| They are often used:
| | *[[custodian|custodians]] and [[trustee]]s who hold assets, have neither the risk or reward of the transaction, but could still suffer liability just because they are legal holders of the assets; |
| *to protect agents and custodians in a transaction who are dealing with assets but do not have principal risk or reward in the transaction, but none the less could be opened to significant liability as a consequence of their role; | |
| *as a means of protecting an [[indemnified party]] against [[consequential loss]] that it could not otherwise recover against the [[indemnifying party]]. | | *as a means of protecting an [[indemnified party]] against [[consequential loss]] that it could not otherwise recover against the [[indemnifying party]]. |
| *In the context of a [[trust]] to negate the trustee equivalent of “[[ultra vires]]” for a corporation, where the trustee acts outside the scope of the powers conferred on it by the trust deed. In that case an indemnity allows the trustee (who would in such a case be personally liable for its actions) to be indemnified for that liability out of the trust’s assets. This is important not just for the trustee, but also third party counterparties: it negates any potential “{{t|ultra vires}}” effect against a bona fide third party without notice of the breach of trust. Such an indemnity is standard (the trustee would almost certainly require it as a condition for accepting its appointment), and would usually be produced as an ordinary part of due diligence in the context of an {{isdama}} negotiation. (the trustee would almost certainly require it as a condition for accepting its appointment), and it is not unreasonable or difficult for the trustee to provide us with this evidence. | | *A [[trustee]] wishing to negate the trustee equivalent of “[[ultra vires]]” where it acts beyond its powers. There the indemnity allows the trustee to be indemnified for that tis personal liability out of the trust’s assets. This is important not just for the trustee, it also negates any “{{t|ultra vires}}” effect against a [[bona fide]] third party without notice of the breach of trust. |
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| ===Scope of losses===
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| *'''Direct losses as a result of [[breach of contract]]''': Needless to say<ref>Well, it ''should'' be needless to say, but the majority of the trust and agency services lawyers in the city seem to need it said to them.</ref>, an [[indemnity]] is '''not''' required from a party to recover direct losses suffered as a result of [[breach of contract]] by that party: the innocent party has an ordinary action available for [[breach of contract]]. Asking for an indemnity for normal breach of contract makes you look slightly dense.
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| *'''Other losses suffered by the [[indemnified party]]''': Indemnities may cover “{{tag|consequential losses}}” incurred by a party arising out of the contract even where they're unrelated to any action of the [[indemnifying party]]. However, the latter case opens the [[indemnifying party]] up to significant and indeterminate liability and it would be well advised to resist giving such an {{tag|indemnity}}.
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| {{sa}} | | {{sa}} |