General Rules. — Guam Code § 30107

§ 30107. General Rules.

In the interpretation of a contract of indemnity, the following rules are

to be applied, unless a contrary intention appears:

1. Upon an indemnity against liability, expressly, or in other

equivalent terms, the person indemnified is entitled to recover upon

becoming liable;

2. Upon an indemnity against claims, or demands, or damages, or

costs, expressly, or in other equivalent terms, the person indemnified is

not entitled to recover without payment thereof;

3. An indemnity against claims, or demands, or liability,

expressly, or in other equivalent terms, embraces the costs of defense

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against such claims, demands, or liability incurred in good faith, and in

the exercise of a reasonable discretion;

4. The person indemnifying is bound, on request of the person

indemnified, to defend actions or proceedings brought against the latter

in respect to the matters embraced by the indemnity, but the person

indemnified has the right to conduct such defenses, if he chooses to do

so;

5. If, after request, the person indemnifying neglects to defend the

person indemnified, a recovery against the latter suffered by him in

good faith, is conclusive in his favor against the former;

6. If the person indemnifying, whether he is a principal or a surety

in the agreement, has not reasonable notice of the action or proceeding

against the person indemnified, or is not allowed to control its defense,

judgment against the latter is only presumptive evidence against the

former;

7. A stipulation that a judgment against the person indemnified

shall be conclusive upon the person indemnifying, is inapplicable if he

had a good defense upon the merits, which by want of ordinary care he

failed to establish in the action.