Template:Indemnity for breach of contract capsule: Difference between revisions

While ''failing to honour'' an [[indemnity]] claim may be a [[breach of contract]], the circumstances giving rise to an [[indemnity claim]] in the first place are ''not''. Indemnities address unwanted externalities that arise from faithful performance of the contract that fall on one party where equity — but not law of the contract — suggests they should fall on the other. An indemnity is simply a contractual technique to mutually reassign such an externality from one party to the other so that the law of contract ''does'' require it. That is all.  

Thus: if there has been a breach of contract causing a loss, you don’t ''need'' an indemnity, because the law of contract ''already'' reassigns that externality on the breaching party automatically. This is called “[[damages]] for [[breach of contract]]”. There are important limitations on one’s liability for [[breach of contract]] — questions of [[causation]], [[remoteness of damage]], [[foreseeability]] and proof of [[loss]] — developed over centuries in the Darwinian crucible of the [[common law]]. They are there for the very good reason that, when things turn to ''[[vanillasoß]]'', the parties to a contract are ''certain'' to disagree about how badly they are wounded and who is at fault. This is a function of their motivated irrationality and [[Conflict of interest|conflicting interests]].  

To claim under a [[well-crafted indemnity]], no breach is required. There is no [[causation]] to prove, or value judgment needed about what the loss has been. Recovering for failure to honour a ([[Well-crafted indemnity|well-crafted]]) [[indemnity]] is therefore straightforward: You must prove the indemnified liability has arisen, that you have demanded it from [[indemnifier]]; and that the [[indemnifier]] has not paid it. Hence: [[summary judgment]].<ref>Note, also, that [[summary judgment]] ''is'' available for certain contractual breaches: Specifically, failures to pay a specified sum, where the obligation to pay can be proved by contract, and the failure to pay can be proven by affidavit. No real question of witness credibility arises.</ref>

So, friends, do not let your opponents babble about how an [[indemnity]] relieves the indemnified party the burden of all that tedious mucking around establishing [[causation]], [[foreseeability]] and so on: it does not. If the loss you are seeking to recover is that indeterminate, ''it is not suitable for an indemnity''. Indemnities are designed for identifiable, deterministic sums that require no judgment or evaluation to arrive at. If your indemnity claim requires that kind of thing the court will require you to prove that loss, and — if it arises from breach — the breach and its causation and foreseeability anyway.