An indemnity agreement is a document that assigns financial duties for a certain task or contract. That is to say, when a business procedure or lease or some official task is being executed, it places certain responsibilities on the individual(s) or group(s) involved, which come in the form of certain payments in case the said party does not fulfill them.
An indemnity agreement often saves the business from certain costs, which might have been incurred had it been the responsibility of the organization then. However, there are certain other cases that are inevitable and the agreement cannot protect then. Hence, this type of an agreement should be framed very carefully such that no party is trapped into a greater number of responsibilities and financial shares to be paid as compensation.
Indemnity agreements generally help take away the liabilities of a company when its shares are passed over to some other company or individual. Similarly, in a lease contract, the agreement indemnifies the owner. It often happens that certain activities involve threats, but the giver of the activity does not assure safety, instead, it becomes the sole responsibility of the involved individual or company. It is thus a contract wherein the owner organization or individual shrugs off responsibilities or liabilities of risks incurred by the receiver of the services or products even.
The structure of an indemnity agreement can be really complex, since it involves a number of legal jargons that are often hard for the layman to crack. However, these are extremely important documents and should thus be prepared as well as maintained carefully. Hence, it is always advisable to take help from legal experts in framing this type of an agreement. There are certain issues and points that should necessarily be included in an indemnity agreement, such as:
- It is very important to introduce the indemnity agreement with the primary objective for framing it. The exact subject matter should be included here and the respondents mentioned clearly.
- An indemnity agreement must contain details of the terms and conditions that apply to it. It should state the cases where the clauses apply and the way they do so, along with details of those cases even where the agreement does not carry any significance, if there be such a format.
- The validity of the indemnity agreement(1) should be mentioned and, most importantly, the financial details should be included. Figures should be exact and accurate, as any single mistake will lead to grave legal consequences.
Indemnity agreements have a wide range of applications and should thus be prepared in a way that they apply to the respective situations. Hence, although a general format may be presented, the document should be adopted respective to the purpose.