What is an Indemnity Agreement?

An indemnity agreement is a contract where one party agrees to protect another party against certain future claims or losses. For example, suppose Jack would like to enter into a contract with Jill to build a playground, but Jill is hesitant because of the potential future liability of such an endeavor. In this case, Jack could chose to indemnify Jill against future claims that may arise due to Jill’s participation in the contract. Jill is protected and Jack gets Jill’s participation. Indemnity agreements will memorialize this understanding and will also set out some of the basic terms of the indemnification. Here is an example of an indemnification agreement.