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, 21 January 2020→The difference between an indemnity and a reimbursement obligation
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===The difference between an [[indemnity]] and a [[reimbursement]] obligation=== | ===The difference between an [[indemnity]] and a [[reimbursement]] obligation=== | ||
You will sometimes see indemnities mentioned in the same breath as obligations to “reimburse” extraordinary costs an agent incurs in carrying out services for its client. You might think, based on the discussion above, that the two ideas bear some similarities — albeit that reimbursement obligations seem benign, and indemnities toxic. You would be right about that. They are so similar | You will sometimes see indemnities mentioned in the same breath as obligations to “reimburse” extraordinary costs an agent incurs in carrying out services for its client. You might think, based on the discussion above, that the two ideas bear some similarities — albeit that reimbursement obligations seem benign, and indemnities toxic. You would be right about that. They are ''so'' similar that some commentators, including this one, would call them identical. | ||
Indeed, calling an indemnity a reimbursement obligation points up the difference between a good one and a bad one quite nicely: compare: | Indeed, calling an indemnity a reimbursement obligation points up the difference between a good one and a bad one quite nicely: compare: | ||
*“You must reimburse me for any taxes I am charged on securities I hold in custody for you” — to which a sensible reaction, is “ok boss; seems fair enough”; with. | *“You must reimburse me for any taxes I am charged on securities I hold in custody for you” — to which a sensible reaction, is “ok boss; seems fair enough”; with. | ||
*“You must reimburse me for any costs, expenses, foregone profits, lost business opportunities I suffer — on my say so — as a result of carrying out my services for you” — to which a sensible reaction is, “sorry but what planet are you on because it doesn’t resemble any I’ve come across in this arm of the galaxy.” | *“You must reimburse me for any costs, expenses, foregone profits, lost business opportunities I suffer — on my say so — as a result of carrying out my services for you” — to which a sensible reaction is, “sorry but what planet are you on because it doesn’t resemble any I’ve come across in this arm of the galaxy.” | ||
===Indemnities and Guarantees=== | ===Indemnities and Guarantees=== | ||
An [[indemnity]] is nonetheless a useful back-up to a [[guarantee]] because: | An [[indemnity]] is nonetheless a useful back-up to a [[guarantee]] because: | ||