Template:Indemnity description: Difference between revisions

Of itself, an {{tag|indemnity}} isn't ''better'' than a contractual claim. It ''is'' a contractual claim. You enforce it by taking legal action for breach of contract: namely, the indemnitor's failure to pay the indemnity amount. Since (if you've crafted it correctly) it is a claim to pay a pre-agreed sum, you don't need to prove your loss: all you need to prove is that the indemnified circumstances have happened. There is no loss to prove; no causation; no breach by the indemnitor (other than its failure to pay. A well-crafted indemnity is therefore apt for summary judgment.   

An indemnity ''doesn't'' have different accounting or capital consequences. It ''isn't'', of itself, more severe. Nor is it, inherently, more broad or of less determinate scope, though, thanks to the continental drift, some indemnities are crafted to catch everything under the sun. They shouldn't be. Indemnities are precision tools for narrow risks. They are not weapons of mass destruction. The sky should not fall in under the weight of a well-proportioned indemnity.   

Indemnities are different from contractual promises:

* Unlike most contractual promises, an indemnity addresses a contingency that ''neither'' party wants: An unexpected financial loss; an adverse change in tax treatment; the commencement of legal action by a third party against one or other party to the contract as a result of its performance.  It allocates these unwanted, potentially unquantifiable, "third party" risks ''away from the person on whom they would naturally fall''.