Janet and Katz entered into an express indemnity contract. An indemnity contract has clause that passes risk of loss or damage from the principal party to another. In an indemnity contract, there is the indemnifier and the indemnity holder. Indemnity holder is the person who is protected from risks and losses whereas; the indemnifier is the person who bears the risk on behalf of another person. In this case, Janet is the indemnity holder while Katz is the indemnifier.
Considering the indemnity contract in consideration, Katz promised to indemnify for damages and loss that may result from the loan of $10,000 Janet had secured from a bank. Under this contract Janet has the following: –
- Damages: Janet has the right to recover all the damages prescribed in the contract; in this case $10,000. It is also the amount Janet may be compelled in a suit to pay the bank.
- Cost of litigation: Janet has the right to be compensated for damages that Janet may result from default of the loan including interest rate and fines.
- Katz should compensate Janet for all costs that will result from the case filed by the bank, including all legal charges.