What is the meaning of indemnity in a contract?
Indemnity is a concept found in business transaction law in Washington and it is an agreement between two parties that one party will not be held responsible for losses or damages. This often comes up in the context of contractual agreements. In such agreements, one party (the “Indemnitor”) agrees to cover any liabilities incurred by the other party (the “Indemnitee”) in the event of a breach of the contract. This agreement stipulates that the Indemnitor will provide compensation, either in the form of money or services, if the Indemnitee is found liable for something under the contract. For example, if a vendor breaches their agreement in providing a service to a customer, the customer may use their indemnity clause and require the vendor to cover the costs for any damages associated with the breach. Or, if a constructor breaches their contract by missing the agreed-upon deadline, the contractor may be responsible for any losses suffered by the customer due to the delay. In short, indemnity in a contract is an agreement by one party to protect the other if they are found liable for something that violates the terms laid out in the contract. This provides an additional layer of protection for the parties involved in a contract in the event of a breach.
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