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 Much ignorance.
-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).
+====What an indemnity ain't====
-An indemnity ''doesn't'' have different accounting or capital consequences to a normal contractual claim. 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 try to catch everything under the sun. They shouldn't. Indemnities are precision tools for narrow risks, not weapons of mass destruction. The sky should not fall in under the weight of a well-proportioned indemnity.
+Of itself, an {{tag|indemnity}} isn't ''better'' than a contractual claim. It ''is'' a contractual claim. Nor does it have a harsher accounting or [[regulatory capital|capital]] impact. You enforce it as you would any breach of contract: by suing to recover the indemnitor's failure to pay the indemnified amount. Since (if you've crafted it correctly) it is a claim to pay a pre-defined (or at any rate [[deterministic]]) sum, the elements you need to prove your claim are easily produced: a well-crafted indemnity is therefore apt for [[summary judgment]].
-===Why all the anxiety?===
+There is no loss to prove; no breach to allege and therefore no causation required, no value judgment needed to satisfy a court of your bona fides: all you need prove is:
-Contracts are simple things: each party has something the other wants, by a contract, they memorialise their willing exchange. But, as economists will tell you, there are sometimes undesirable consequences of commercial activity: outcomes that neither party wants, nor can avoid, even if each keeps faithfully to its side of the bargain.
+*There is an [[indemnity]]
+*You have suffered the indemnified event;
+*You have calculated the indemnified sum;
+*You have demanded it from [[indemnitor]]; and
+*The [[indemnitor]] has failed to pay it.
+Nor is an {{tag|indemnity}} (if properly crafted), broader or of less determinate scope than any other contractual claim, though, thanks to the continental drift, some indemnities try to catch everything under the sun. They shouldn't. Indemnities are precision tools for narrow risks, not weapons of mass destruction. The sky should not fall in under the weight of a well-proportioned {{tag|indemnity}}.
+====How is an indemnity different from a breach of contract?====
+Contracts are simple things: each party has something the other wants; by contract, they memorialise their willing exchange. And, should you fail to keep up your end of a bargain, your counterpart must have a means of redress. This is a claim for [[breach of contract]]. However plain your promise, the theoretical extent of the loss you cause should you fail to keep to it is limited only by the depraved imagination of the opposing lawyer: loss of bargain, hedge break costs, lost opportunity, [[consequential loss]], taxes, reputational damage, [[restitution]], emotional distress, nervous shock, (needless to say, but inevitably said) legal costs and even [[exemplary damages]] to punish you for your high-handed and contumelious disregard for another merchant's reasonable commercial expectations.
+These things have a nebulous air to them - they will require evidence: claim and counterclaim, examination and cross, and the law has developed techniques - principally [[causation]] and [[remoteness of damage]] - to limit unnecessary excess. But in general note this: the parties expect to hold up their end of the bargain. No-one enters a contract planning to sue on it. The difficulties in proving your claim are thus counterbalanced against the general expectation that, a merchant's word being its bond, it will be a sad day when you have to do so.
+But, as economists will tell you, there can be undesirable consequences of commercial activity: outcomes that neither party wants, nor can avoid, even if each keeps faithfully to its side of the bargain. For these contingencies we have indemnities. Indemnities compensate for losses that do not arise from ''breach'' of contract, ''but from faithful performance of it''. They address a contingency that ''neither'' party wants: An unexpected financial loss; legal action by a third party against one or other party to the contract as a result of its performance. Indemnities allocate these unwanted, "third party" risks ''away from the person on whom they would naturally fall''.
+{{box|The example ''par excellence'':
-Indemnities compensate for losses ''that do not arise from breach of contract'':
+''Unexpected taxes imposed on a custodian in the course of holding securities for its client.''
-* They address 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''.
+The tax is no-one's fault. It could not be avoided. Because of the nature of the contract, it falls on the service provider, not the beneficiary of the service. It is easily quantifiable.}}
+====You keep saying "if properly crafted"====
+Yes, I do.
+===Why all the anxiety?===
 The questions in your mind should always be:
 *Why shouldn't this loss fall on the party who would, under settled legal principles, ordinary bear it? If it should, and it would, you don't need an indemnity.