Indemnity

Sec 124 , 125 of Indian contract act of 1872

Indemnity Bond Meaning
An indemnity bond is a legal document that gives you the right to collect
compensation from the principal for a claimed situation. Concerning the agreement,
the company is mandated to pay a premium. For this, the surety company is
supposed to pay a premium. The bonded contractor earlier is expected to settle this
premium with the surety company; otherwise, the company can sue the contractor.
Features of Indemnity Bond
•Arranged in terms of trust between the parties involved – This contract depends
on mutual trust between individuals.
•Takes care of the loss associated with the contract only – It covers the
compensation only for the events mentioned in the contract. The promiser is liable
to bear those events only.
•All terms considered must be admissible in front of Law. The terms associated
with the bond should be legal.
Indemnity bonds are needed for the following situations
•Borrowing money from banks.
•For the release of payment
•In the event of losing a fixed deposit receipt
•Transfer property to legal heirs
•Property transfer,
•On the occasion of death claims
•Electricity connection transfer
•Government Indemnity schemes
These bonds are enforced to provide legal protection to the agreed
parties. Having an indemnity bond helps projects to progress
professionally and ethically
How Does an Affidavit and Indemnity Bond Differ?
An affidavit is like a statement of the oath, which ensures that the
statements made are true and correct to the best of an individual’s
knowledge. The document states that no material info or knowledge
is concealed. However, the Indemnity bond is a document providing
security to a party that will be given compensation in case of breach
of contract. The compensation may be monetarily or in any medium,
as agreed upon in the bond