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Letter Of Indemnity.....what Is It?
I have to ask a company for a letter of indemnity but I really do not know what I am asking for. What is it please?
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From the web:
"A written undertaking by a third party (such as a bank or insurance company), on behalf of one of the parties (the first party) to a transaction or contract, to cover the other party (the second party) against specific loss or damage arising out the action (or a failure to act) of the first part".
Without knowing the nature of the contract you're referring to, it's hard to be more specific, but basically it's a guarantee (written by person A) that says "If person B carries out an action that results in a debt to the recipient of this letter, I'll honour that debt on B's behalf".
"A written undertaking by a third party (such as a bank or insurance company), on behalf of one of the parties (the first party) to a transaction or contract, to cover the other party (the second party) against specific loss or damage arising out the action (or a failure to act) of the first part".
Without knowing the nature of the contract you're referring to, it's hard to be more specific, but basically it's a guarantee (written by person A) that says "If person B carries out an action that results in a debt to the recipient of this letter, I'll honour that debt on B's behalf".
>>>It's a good thing to have?
As an analogy, consider the position if you were asked to act as guarantor for a friend who was renting a flat (so that, if they failed to pay the rent, you could then be forced to do so).
It would be a 'good thing' for the landlord (because they'd know that they'd always be able to get their rent). It would be a 'good thing' for your friend (because they'd be allowed to take on the tenancy). Whether or not it would be a 'good thing' for you is, however, questionable. You'd have the satisfaction of knowing that you'd helped a friend but also the worry about possibly be forced to pay their debts to the landlord if your friend defaulted.
Similarly, a letter of indemnity (which is much the same as the 'guarantee' in my example) is a 'good thing' for the person who is assured of getting their money if things go wrong, it's a 'good thing' for the person who the letter is providing backing for (because they'll be able to enter into whatever type of contract it is that's involved) but it could potentially be a very 'bad thing' for the person writing the letter if they're later forced into settling someone else's debt!
As an analogy, consider the position if you were asked to act as guarantor for a friend who was renting a flat (so that, if they failed to pay the rent, you could then be forced to do so).
It would be a 'good thing' for the landlord (because they'd know that they'd always be able to get their rent). It would be a 'good thing' for your friend (because they'd be allowed to take on the tenancy). Whether or not it would be a 'good thing' for you is, however, questionable. You'd have the satisfaction of knowing that you'd helped a friend but also the worry about possibly be forced to pay their debts to the landlord if your friend defaulted.
Similarly, a letter of indemnity (which is much the same as the 'guarantee' in my example) is a 'good thing' for the person who is assured of getting their money if things go wrong, it's a 'good thing' for the person who the letter is providing backing for (because they'll be able to enter into whatever type of contract it is that's involved) but it could potentially be a very 'bad thing' for the person writing the letter if they're later forced into settling someone else's debt!
Usually they are pretty routine. You lose a share certificate the Company issuing a new one wants indemnifying against any loss if the original is used to sell the shares.
Or, a house is sold with work undertaken and building regs certificate cannot be found, an indemnity is taken should the house fall down. In this instance an insurance policy would be bought to cover the costs of worst case scenario.
Or, a house is sold with work undertaken and building regs certificate cannot be found, an indemnity is taken should the house fall down. In this instance an insurance policy would be bought to cover the costs of worst case scenario.
>>>It is all to do with a lost share certificate
So what you're referring to is actually this letter:
http://
(It's so much easier to answer a question when we're told what it's actually about!)
;-)
So what you're referring to is actually this letter:
http://
(It's so much easier to answer a question when we're told what it's actually about!)
;-)
another fr'instance, since a few people are confused
when I bought my house, the sellers hadnt paid ground rent for ever !
A claim can only be on the last six years so they indemnified me for a possible claim of ground rent for six years ( £300)
which occurred, to my disbelief
I got a letter a year or two later asking for six years ground rent
actually they asked for seven and when queried they said it was a mistake but that of course is another story
when I bought my house, the sellers hadnt paid ground rent for ever !
A claim can only be on the last six years so they indemnified me for a possible claim of ground rent for six years ( £300)
which occurred, to my disbelief
I got a letter a year or two later asking for six years ground rent
actually they asked for seven and when queried they said it was a mistake but that of course is another story
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