Today I was forwarded a bank indemnity document that a bank wanted our small business to sign so that we could deposit foriegn checks into our business bank account.
The level of indemnity was incredible, there was no limitation on the amount and the recoverable payments were based on whatever the bank deemed that it wanted to pay.
The terminology used was “or may in its discretion pay in respect of such claim(s)” which would open a small business up to any liability that the bank feel appropriate with no limitations.
That would be an unacceptable risk without…
a maximum liability in place.
I would normally also consider it standard practice to include a provision with a maximum level of exposure for the small business that is related to the level of the check that is processed as well as agreed notification to small business prior to any payments made by the bank that are recoverable under this indemnity.
I’m guessing the bank would rather we did not process foreign checks at all as the amounts we’re processing are not large and this seems a little excessive for checks of a few hundred dollars per month!