Q:

What is a letter of indemnity?

A:

Quick Answer

BusinessDictionary.com defines a letter of indemnity as an official document that insures the property of one party against damage by another. This type of letter is typically written by a bank or insurance company.

 Know More

Full Answer

Investopedia explains that the main purpose of a letter of indemnity is to assure both parties that financial reparations will be made if part of the contractual obligation is broken. This is generally related to contractual agreements where a valuable item is being transported or taken care of by a second party. According to BusinessDictionary.com, the letter of indemnity assures the party who owns the item that if it is damaged, lost or stolen, the party will be financially compensated.

Investopedia also explains that a letter of indemnity provides peace of mind that no financial losses will occur during the course of the business transaction. In this way, letters of indemnity are similar to insurance policies that replace stolen or damaged property with property or money of equal value. However, unlike insurance policies, letters of indemnity can be agreed upon between individuals and any organization with oversight into the matter. The Law Dictionary notes that a letter of indemnity is often known as an indemnity bond.

Learn more about Business Communications

Related Questions

  • Q:

    What is a confirmation letter?

    A:

    A confirmation letter is a formal document that summarizes the verbal agreement made between two parties. This type of letter is commonly used by businesses to record and acknowledge specific tasks. There are many variations of confirmation letters. Each variation corresponds to specific agreements, such as confirming receipt of an order, confirming reservations, confirming a schedule of an appointment and confirming travel arrangements.

    Full Answer >
  • Q:

    What is the difference between a property deed and title?

    A:

    Title is a legal term that means ownership while a deed is a legal document that serves to transfer the title of a piece of property from one party to another. The terms are used most often in the field of real estate, but deeds are also used in other circumstances.

    Full Answer >
    Filed Under:
  • Q:

    What are the legal aspects of business communication?

    A:

    Being held liable for injury, damage or economic loss are some of the legal aspects of business communication, according to Claim Journal. Increased liability exposure through websites, advertising or public speeches means companies have to take proactive measures.

    Full Answer >
  • Q:

    What is an affidavit of service?

    A:

    An affidavit of service is a legal document attesting to the delivery of case-related paperwork to one or more parties in a legal dispute. It's used to certify the service of a writ, notice, summons or process, and must include the time and method of delivery via written statement.

    Full Answer >

Explore