What does indemnity mean in contract terms?

• A. A guarantee to share profits
• B. A promise to provide insurance coverage
• C. Signing to be freed from liability and shift blame
• D. Waiving all contractual obligations

Answer: (C)

Indemnity in contract terms is a promise by one party to cover specific losses or claims for the other party, effectively shifting the risk of those liabilities to the party agreeing to indemnify. This means the indemnifying party will reimburse costs, damages, or defense expenses that arise from certain events or claims, so the indemnified party isn’t left bearing the financial burden. The option described aligns with that idea, as it conveys taking on liability and shifting responsibility to the signer to protect the other party. It’s not about sharing profits, it isn’t simply about providing insurance coverage, and it isn’t about waiving contractual obligations.