Which of the following best defines a contract of indemnity?

A contract of indemnity is specifically characterized as an agreement in which one party agrees to compensate the other for certain damages or losses that may occur. This means that if one party incurs a loss due to the actions or negligence of another, the indemnitor (the party providing indemnity) is obligated to cover those losses. This type of contract is often used to protect parties against financial harm, ensuring that the party who suffers a loss is reimbursed, thus mitigating their financial risk.

In contrast, the other options do not accurately capture the essence of an indemnity contract. While mutual obligations and protections against future liabilities may be features of different types of contracts, they do not specifically identify the unique compensation aspect inherent in indemnity agreements. Similarly, sharing damages does not reflect the one-sided nature of indemnity, where one party assumes the financial responsibility for another's potential losses.