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Template:Indemnity for breach of contract capsule: Difference between revisions
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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. | 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 ''[[ | 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 ''[[vanillesoße]]'', 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> | 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> | ||