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Template:Indemnity description: Difference between revisions
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{{box|An indemnity is a precision tool for a narrow risk, not a weapon of mass destruction.}} | {{box|An indemnity is a precision tool for a narrow risk, not a weapon of mass destruction.}} | ||
This is where things have gone awry. Many latter-day indemnities are not articulated this way. It is common for indemnities to catch every contingency under the sun: The indemnifier is asked to cover “any and all losses, costs and damages, howsoever arising, incurred or suffered in diligent performance of the contract”. An [[indemnified party]] showing uncommon largesse might the [[indemnifier]] off those losses caused by its own [[negligence, fraud or wilful default]]. That’s another whole story. | This is where things have gone awry. Many latter-day indemnities are not articulated this way. It is common for indemnities to catch every contingency under the sun: The indemnifier is asked to cover “any and all losses, costs and damages, howsoever arising, incurred or suffered in diligent performance of the contract”. An [[indemnified party]] showing uncommon largesse might let the [[indemnifier]] off those losses caused by its own [[negligence, fraud or wilful default]]. That’s another whole story. | ||
If you’re asked for something as mad as that, refuse, for it implies your counterpart has not grasped the fundamentals of a bargain: accepting the losses, costs and damages that naturally arise from the diligent performance of its contractual obligations is precisely the consideration your party ought to be offering you. That is why you’re even at the table. Indemnities are there to capture unexpected and unlikely possibilities that ought not to arise, but whose provenance is beyond the promising party’s control. | If you’re asked for something as mad as that, refuse, for it implies your counterpart has not grasped the fundamentals of a bargain: accepting the losses, costs and damages that naturally arise from the diligent performance of its contractual obligations is precisely the consideration your party ought to be offering you. That is why you’re even at the table. Indemnities are there to capture unexpected and unlikely possibilities that ought not to arise, but whose provenance is beyond the promising party’s control. | ||