Definition and Citations:
A bank or insurance company promises by this written confirmation to act as a 3rd-party on behalf of the first party in a transaction or contract. This 3rd-party covers loss or damage to the 2nd-party in the agreement caused by the first party. Also known as indemnity bond.
TLD Example: The purchase of the new equipment could not be completed without a letter of indemnity from the bank supporting the buyer’s financial stability.