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TeachMeFinance.com - explain Letter of Indemnity
Letter of Indemnity -- A document which the writer issues to another party agreeing to protect them from liability for the performance of certain acts.
1. In the case of international transportation when a negotiable bill of lading has been issued but is not available for surrender to the carrier when it is desired to take delivery of the shipment, a bank may issue a letter of indemnity to the carrier to persuade them to release the cargo. (A Letter of Guarantee may also be used ). The bank will usually obtain a similar letter from its client to protect itself against the liability it assumes on behalf of the client.
2. On export shipments, some carriers may permit shippers to issue letters of indemnity to the carriers in order to secure from them clean bills of lading in place of foul, or to replace lost original bills of lading.
About the author
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Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".
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Copyright © 2005 by Mark McCracken, All Rights Reserved.
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