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Few things are more apt to excite an lawyer’s animal spirits than sight of an [[indemnity]]. Once a proud creature of the common law, in the hands of mediocre lawyers this noble beast has fallen upon hard times. Where once it prudently allocated unwanted outcomes, now the indemnity is seen, by those who would wield it, as a [[smart bomb]] for surgically eliminating evil whilst vouchsafing loved ones to the bosom of the Earth. Those asked to indemnify, on the other hand, feel their throats tighten in a manner redolent of the closing stages of a Conrad novel. | Few things are more apt to excite an lawyer’s animal spirits than sight of an [[indemnity]]. Once a proud creature of the common law, in the hands of mediocre lawyers this noble beast has fallen upon hard times. Where once it prudently allocated unwanted outcomes, now the indemnity is seen, by those who would wield it, as a [[smart bomb]] for surgically eliminating evil whilst vouchsafing loved ones to the bosom of the Earth. Those asked to indemnify, on the other hand, feel their throats tighten in a manner redolent of the closing stages of a Conrad novel. | ||
===What an indemnity is=== | ===What an indemnity is=== | ||
“Why the excitement,” you might ask, “for isn’t an [[indemnity]] simply a promise to pay a defined sum should pre-agreed circumstances arise?” Quite so, if used as the Lords<ref>House of Lords, that is.</ref> intended. For an indemnity is a sensible way — perhaps the only way — to allocate the risks of externalities two merchants might encounter when providing one another goods and services. | |||
But remember: the [[common law]] has evolved a sophisticated means for allocating losses between the parties to a commercial bargain. It is called the law of [[contract]]. You only need an indemnity to addresses contingencies the [[common law]] has overlooked. One should approach the request for one with a cautious air. Your uppermost question should always be “''why''”? Why shouldn't this loss fall on the fellow who would ordinarily bear it? If it would, and it should, you don’t need an indemnity. If you are still persuaded you do, ask how well you can articulate your expected loss? If you can describe it with the precision of a laser, all well and good: if it is no more than a faintly discomfiting sense that [[Chicken Licken|the sky might fall on your head]], expect a stout challenge from your counterpart. The more open ended the loss, the more of a job you will have persuading him (and for that matter, a learned magistrate) to wear it. | |||
===What a (well-crafted) indemnity is not=== | ===What a (well-crafted) indemnity is not=== | ||