Indemnity

A promise by one person to compensate another person for an obligation incurred or payment made by the second person. Often, an indemnity is given for obligations or payments imposed on the second person that are caused by something that the first person did. One partner, for example, may agree to indemnify the other partners for payments that the other partners are forced to make under obligations that the first partner imposes on the partnership in breach of the partnership agreement. Corporate statutes provide that corporations must indemnify officers, directors, and certain other persons for expenses incurred in connection with performing duties for or at the request of the corporation, but only if certain requirements are satisfied (e.g., CBCA, s. 124). Corporations have a discretion to indemnify in a broader range of circumstances.