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Trading Terms

Indemnity

In financial terms, a contract where one party assumes responsibility for compensating another for any losses incurred as a result of a transaction with a third party is known as suretyship. This type of agreement establishes a primary liability for the surety, making them accountable for any financial repercussions faced by the other party. In simpler terms, it is a form of protection for one party against potential losses caused by a third party. This concept is crucial to understand in the world of finance, as it plays a significant role in mitigating risks and ensuring financial security.
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