What does a specific indemnity provide in a contract?

What does a specific indemnity provide in a contract?

• A. Targeted protection covering an identified risk
• B. A general liability waiver for the seller
• C. Financial assistance for buyers
• D. Negotiation power in future transactions

Answer: (A)

A specific indemnity in a contract serves to provide targeted protection covering an identified risk. This means that the party providing the indemnity agrees to compensate the other party for specific losses or damages that may arise from certain defined situations or conditions. By outlining specific risks, parties can ensure that both sides understand the scope of protection and the responsibilities involved. This type of indemnity is particularly useful in real estate transactions where various risks, such as environmental issues, title problems, or zoning disputes, may arise. By having a specific indemnity in place, the parties can allocate responsibility for these risks in a clear and precise manner, thereby protecting themselves from potential financial losses related to those specific issues. The other options do not accurately reflect the purpose of a specific indemnity. For example, a general liability waiver would not provide targeted protection for any identified risk, but rather attempt to cover broader liabilities. Financial assistance for buyers does not relate to indemnity provisions, as this is more about financial support than risk allocation. Similarly, negotiation power in future transactions pertains to leverage in discussions rather than the focused risk management aspect inherent in a specific indemnity.

A specific indemnity in a contract serves to provide targeted protection covering an identified risk. This means that the party providing the indemnity agrees to compensate the other party for specific losses or damages that may arise from certain defined situations or conditions. By outlining specific risks, parties can ensure that both sides understand the scope of protection and the responsibilities involved.

This type of indemnity is particularly useful in real estate transactions where various risks, such as environmental issues, title problems, or zoning disputes, may arise. By having a specific indemnity in place, the parties can allocate responsibility for these risks in a clear and precise manner, thereby protecting themselves from potential financial losses related to those specific issues.

The other options do not accurately reflect the purpose of a specific indemnity. For example, a general liability waiver would not provide targeted protection for any identified risk, but rather attempt to cover broader liabilities. Financial assistance for buyers does not relate to indemnity provisions, as this is more about financial support than risk allocation. Similarly, negotiation power in future transactions pertains to leverage in discussions rather than the focused risk management aspect inherent in a specific indemnity.