Template:Liability carveouts for indemnities: Difference between revisions

An {{tag|indemnity}} is the one time in a {{tag|contract}} that it makes sense to exclude liability for [[negligence, fraud or wilful default]], a contractual standard which otherwise is the product of muddy logic.  

Generally the standard of conduct one must be held to in a contract is, of course, the contractual one. But where an {{tag|indemnity}} is concerned, one party has agreed to assume liability for the other’s loss ''even though the indemnifier has not breached the contract or even acted foolishly in any way''. And nor is the fact that indemnified party has itself performed the contract the end of it: The loss in question arises through the agency of some ''third party'', away from the contract in which the [[indemnity]] lies. (A loss as between the two parties to the contract would be governed by the law of contract and breach and ''not'' an indemnity).

 

Here the eventuality is one the parties have not bargained upon, and that is beyond their control. This is just the sort of place where the courts can step in to imply reasonable boundaries on liability. A “[[negligence]]” carve out invites that.

 

Hence the [[indemnifier]] may seek to restrict its liability under the {{tag|indemnity}} to compensate only losses which the beneficiary has not itself been negligent in incurring, in that tortious sense. <br/>