What Is A Bond Of Indemnity?
An indemnity bond is an obligation that protects the lender if the borrower violates the terms & circumstances of the loan obtained. It is mostly used in the lending and mortgage industries. An indemnity bond is created using stamp paper that has a different monetary value in each state. Notably, it occurs in a number of formats and is designed to satisfy one’s desires as well as legal obligations.
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An indemnity bond is a promise made by someone signing a contract to cover losses in the event that the agreement is broken. This means that the lender will have every right to collect losses and damages resulting from a defaulting party if a person is required to fulfil contractual obligations but chooses not to do so. Continue reading to learn more about the indemnity bond.
What does “indemnity” refer to?
The Latin word Indemnis, which meaning unharmed and free from loss or injury, is where the word indemnity first appeared. In order to reflect the true meaning, this word has been appropriated to describe the indemnity bond contract in law.
What exactly is an indemnity bond?
According to Section 124 of the Indian Contract Act of 1872, an indemnity bond is a contract between two people or parties wherein one of the parties undertakes to compensate the other for losses and damages incurred by the latter due to the former’s or the latter’s actions. In other terms, it is a financial agreement made between two parties that assures someone of financial security by allowing the party who was wronged to seek monetary damages in the event that the agreement is broken. The mortgage, accounting, legal, IT, and insurance sectors are where the indemnity bond is most frequently employed.
In what states and languages is an indemnity bond known? (Kannada, Telegu, Marathi)
Here is a breakdown of how indemnity bonds are referred to in various countries and languages:
| State | Language | Indemnity bond name |
| Assam | Assamese | ক্ষতিপূৰণ বণ্ড |
| Maharashtra | Marathi | नुकसानभरपाई बाँड |
| Bihar, Uttar Pradesh, Jharkhand, Madhya Pradesh, Delhi, Chhattisgarh, Chandigarh, Haryana, Himachal Pradesh, Rajasthan, Uttarakhand | Hindi | क्षतिपूर्ति बांड |
| West Bengal & Tripura | Bengali | (ক্ষতিপূরণ – পত্র, খেসারত নামা)
Kṣatipūraṇa – patra, khēsārata nāmā |
| Gujarat | Gujarati | ક્ષતિપૂર્તિ બોન્ડ |
| Telangana & Andhra Pradesh | Telugu | (నష్టపరిహారం బాండ్)
Naṣṭaparihāraṁ bāṇḍ |
| Kerala | Malayalam | നഷ്ടപരിഹാര ബോണ്ട്
naṣṭaparihāra bēāṇṭ |
| Odisha | Odia | କ୍ଷତିପୂରଣ ବନ୍ଧ |
| Karnataka | Kannada | ಪರಿಹಾರ ಬಾಂಡ್ (Parihara Bond) |
| Tamil Nadu | Tamil | (இழப்பீடு பத்திரம்) Iḻappīṭu pattiram |
Indemnity bonds: Uses
- For information on the fundamental application of an indemnity bond, see the section below:
- The indemnity bonds guarantee monetary compensation in the event that a contract is broken as a result of any criminal activity.
- Drawing an indemnity bond is primarily done to protect either party from the anticipated loss.
- Another type of indemnity bond is a surety bond, in which the guarantor pays the sum guaranteed in the event that the agreement is broken.
What kinds of indemnity bonds are there?
A time-limited indemnification bond is drawn between two parties. There are now six different types of indemnity bonds:
- Lease agreement
- Supply agreement
- Loan agreement
- Licensing agreement
- Legal contracts
- Commercial contracts
What distinguishes an affidavit from an indemnity?
Indemnity and affidavit are two often used legal phrases. They disagree despite having a similar appearance. As the term suggests, indemnity refers to any form of security or protection that one person or entity is providing to another. The Affidavit, on the other hand, is formally a written declaration created to support the veracity of any truth before a court of law.
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