A letter of indemnity is a promise by one party to protect another against losses that may arise if a shipping instruction or document is accepted outside the normal course. In international trade, it is often used to support release or handling of cargo when original papers are missing, delayed, or need to be replaced, though acceptance depends on the carrier or other party involved.
How it is used
In practice, a letter of indemnity does not change the underlying shipment itself; it shifts risk. A shipper, consignee, or other interested party may sign it to assure a carrier, terminal, or bank that any resulting claims, costs, or liabilities will be covered if the action later causes a problem.
Because it is a risk-allocation document, its wording matters. It may be backed by a guarantee from a bank or insurer, but that is not automatic. Whether it is enforceable can depend on the contract, the governing law, and the specific facts, and some requests may be rejected if they appear too risky or inconsistent with mandatory rules.
Importers and exporters should treat a letter of indemnity as a last-resort document, not a substitute for proper shipping papers. For example, it may be used when cargo must be released before original bills of lading arrive, but the party requesting that release is usually taking on the chance of a later claim, mismatch, or dispute.