Letter of Indemnity Law and Legal Definition

A letter of indemnity refers to a document which the writer issues to another agreeing to protect him/her from liability for the performance of certain acts. The principal behind a letter of indemnity is the guarantee that losses will not be suffered. For example, 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.