Indemnity: Difference between revisions

Indemnity (view source)

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 They are often used:
 *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]].
+*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 “{{tag2|Ultra Vires|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.
 ===Scope of losses===