Indemnities for Breach of Contract Claim
An indemnity is an agreement to compensate another party for any loss or damage arising under a breach of contract. As an indemnity provides for concurrent liability with the borrowers liability there is no requirement for a formal demand.
Indemnities are often included in commercial agreements and can specify the loss covered which may be significantly greater or cover a wider range than that available through a claim brought for ordinary breach of contract. For example the indemnifier may be required to meet all the legal costs incurred by the creditor in pursuing a claim.
It is possible for a director, or member of a limited liability partnership to provide both a personal guarantee, for example, for the factored debts of a business, whilst agreeing to indemnify the finance company against any loss arising under the factoring agreement with the business.
Failure of an individual providing an indemnity to meet any claim under the agreement could result in a bankruptcy order being made against them.