General indemnity agreement (GIA)

Textbook case: an Ohio civil works contractor gets its first surety line: 15 million dollars single, 40 million aggregate. Before the first bond goes out, the underwriter has the indemnity agreement signed by the company, its equipment rental affiliate, the two owners and their wives. That document is what turns surety into a credit business. The surety pays the obligee or the unpaid suppliers, then turns to the signatories, jointly and severally, for the loss, the attorneys' and consultants' fees, and interest. The clauses that matter are rarely read at signing. The collateral security clause requires the indemnitors to post, on demand, an amount equal to the reserve the surety sets as soon as a claim comes in, and American courts often grant specific performance of it without waiting for the loss to be paid. The prima facie evidence clause makes an itemized statement of payments made in good faith binding unless the indemnitors prove otherwise. The assignment clause bites on the first event of default: contract balances, equipment and receivables pass to the surety, and the takeover right lets it step onto the job, finish it with another contractor or have the contract balance paid straight to itself. The spouses sign because of the household assets, the house first, which are often all that is left once the company is empty. Under French law, article 1415 of the Civil Code limits a surety undertaking given by a spouse married under community property to that spouse's own assets and income, unless the other spouse expressly consents: that consent is exactly what the second signature is there to obtain. In the United States, courts are split on whether the Equal Credit Opportunity Act rule on spousal signatures applies to these agreements at all.