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Indemnity rebuttal: Difference between revisions
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Amwelladmin (talk | contribs) (Created page with "===Indemnity for all costs and expenses=== You have asked us to indemnify you for all your costs, expenses and losses incurred in your performance of the contract. This is too...") |
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{{sa}} | |||
*[[Indemnity]] | |||
*[[Negligence, fraud or wilful default]] | |||
This is what we can agree to: | |||
:''such liabilities as the Principal may reasonably incur in carrying out its obligations and exercising its rights under the agreement (beyond its ordinary costs of doing so), which it could not reasonably have avoided and that do not arise from its own [[negligence]], [[wilful default]] or [[fraud]], and any reasonable costs of mitigating or defending them.'' | |||
===Indemnity for all costs and expenses=== | ===Indemnity for all costs and expenses=== | ||
You have asked us to indemnify you for all your costs, expenses and losses incurred in your performance of the contract. This is too wide. This includes your costs of doing business: your rental, your labour costs, even, conceivably, your employees’ drycleaning. These are not for us to bear. | You have asked us to indemnify you for all your costs, expenses and losses incurred in your performance of the contract. This is too wide. This includes your costs of doing business: your rental, your labour costs, even, conceivably, your employees’ drycleaning. These are not for us to bear. | ||
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Only costs of this nature are suitable for an indemnity. So yes, we do insist on calling these “extraordinary expenses”, or “costs not arising in the ordinary course of business” | Only costs of this nature are suitable for an indemnity. So yes, we do insist on calling these “extraordinary expenses”, or “costs not arising in the ordinary course of business” | ||
===Indemnity for breach of contract=== | ===Indemnity for breach of contract=== | ||
*The appropriate remedy for a [[breach of contract]] is an action ''in'' [[contract]] for [[damages]] resulting from that breach. | |||
:*such an action would be bounded by requirements to prove [[breach]], [[loss]], [[causation]], and [[foreseeability]]/[[proximity]] of [[damages|damage]]. | |||
:*[[Foreseeability]] and [[causation]] in particular play an important role in limiting indeterminate liabilities. | |||
*An [[Indemnity]] is contractual agreement to pay a sum of money in pre-defined circumstances. It does not require breach of a contract. Thus, considerations of breach, loss, quantum, causation, and proximity do not apply. An [[indemnity]] may give rise to [[Indeterminate liability|indeterminate]] and potentially unlimited liabilities. Hence indemnities should be tightly constrained. | |||
*There is no good reason to suppose that the ordinary law of [[contract]] is inadequate to properly compensate you for our failure to perform our contract. | |||
*On the other hand, there are good grounds to fear that an indemnity for breaches of contract may significantly aggravate our risk in entering the contract. | |||