Assume that Dr. Early is an independent contractor for Pharzime, and Dr. Early sells the hospital 1,000 Gensol tablets. Pharzime does not deliver on time, and the hospital sues Dr. Early for the breach of the contract. Dr. Early is found liable for $10,000 worth of damages. Dr. Early will probably be able to recover the $10,000 from Pharzime, because of the concept of:

Indemnification

Explanation:

Dr Early is protected under the concept of indemnification clause, Indemnification is an agreement between two or more trading parties where one party agrees to cover up for the losses that the other party might incur in the course of business transaction, resulting from the negligence or a breach of agreement on the side the paying party

It has to be well defined, understood and endorsed by the parties at it becomes legally binding

With this in place, risks are better managed in the course of a contract

indemnification

Explanation:

Indemnification is a concept that shifts risk from one party to another.

In indemnification, thehe corporation may advance to or reimburse directors for the expenses and liabilities they incur as a result of their corporate decision making.

This only applies to directors and officers, not shareholders.