Understanding indemnities

Indemnities feature in many commercial contracts, but there are a number of common misconceptions about their nature, which can lead to surprising outcomes if claims under them are made or challenged. This briefing answers frequently asked questions, clears up some misunderstandings and considers how the English courts have interpreted indemnities over the years. It also includes some drafting tips to help ensure the indemnity in your contract provides the protection you expect.

An indemnity could be described as a contractual arrangement under which one party promises to protect another person against loss or to compensate another person for a specific liability that person incurs. The legal nature of indemnities, however, is less clear and even leading academics have commented on their ‘puzzling’ nature…

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