Concept of indemnity

• An agreement by one person ( x) to pay to another ( y) sums that are owed , or may become owed , to him by a third person ( z ) .
• It is not conditional on the third person dafaulting on the payment , i.e can sue x without first demanding payment from Z . If it is conditional on the third person's default ( i.e. if Z remains the principal debtor and must be sued for the money first ) it is not an indemnity but a guarantee .
• Unlike a guarantee , an indemnity need not be evidenced in writting .
• Indemnity shifts liability from the legally responsible person to another person .
• Indemnity is a claim for reimbursement by a party who has paid or may pay money for a loss or liability against a party who should reimburse the pay or because of an agreement , relationship , or duty .
• Indemnity 's roots are grounded in principles of equity .
• Indemnity , a form of restitution , is founded on equitable principles ; it is allowed where one person has discharged an obligation that another person should bear ; it places the final responsibility where equity whould lay the ultimate burden .