Can a Letter of Indemnity Protect You in a Breach of Contract Claim?
Any person or entity entering any kind of business agreement is choosing to be interdependent. By getting work done together, work is expedited and optimized. Though agreements in theory are designed to make life easier, there are hiccups and speed bumps that can slow down a process or create complications that make the original agreement a hassle and counterintuitive. Worse still, then, is a failed contract — that is, a contract where one party did not fulfill their end of the agreement. Today we explore the relationship between a letter of indemnity and a breach of contract claim.
WHAT IS A LETTER OF INDEMNITY, AND HOW CAN IT PROTECT YOU?
A letter of indemnity is one way a breach of contract’s effects can be mitigated. An indemnity bond, as it is commonly referred to, acts as a form of insurance. It is an agreement whereby certain provisions are guaranteed between both parties. Think of it similarly to another contract, whereby the damages of an original broken contract may be repaired or remedied.
A letter of indemnity can help an underperforming party to repair any damages the other party incurred. Similarly, for the afflicted party, a letter of indemnity ensures that one does not have to bear the brunt of the underperforming party’s mistake. Indemnity bonds, or a letter of indemnity, are a useful tool that can be drafted by a financial advisor or attorney in order to protect a contract from the nature of certain unpredictabilities.
QUESTIONS REGARDING BREACH OF CONTRACT? CONTACT US TODAY
Being on any end of a breached contract can be quite difficult. You either have to deal with the ramifications of a party that failed to perform, or you have a company seeking compensation due to the inability to have fulfilled a contract. While there are certain actions that can be taken to prevent breaches of contracts, when a breach ultimately occurs, there are still just as many legal options to ensure you aren’t suffering the brunt of the event. At King & Jones, our Chicago breach of contract attorneys can help answer any questions you might have regarding breach of contract when you contact our team today.
