Indemnity, governed by Sections 124-125, is a contract whereby one party (indemnifier) promises to compensate the other (indemnified) for loss or damage. The indemnifier assumes liability for specified risks or contingencies. Key distinctions: Indemnity is unilateral (one-sided); Guarantee involves three parties (principal debtor, guarantor, creditor); Insurance is with an insurer who assumes risk for premium. Indemnity obligations include compensating actual loss, covering specified events only, and compensation occurring after loss is incurred. Case law: Ramchandra v. Sindhu establishes that indemnity applies only to actual losses. Practical application: Service providers often receive indemnities for professional liability; employers indemnify employees for authorized acts. Limitations include public policy (cannot indemnify for illegal acts) and actual causation (loss must result from specified events). Exam tip: Distinguish indemnity from guarantee and insurance; focus on the one-party nature and when compensation is due (after loss).