Understanding Contractual Indemnities - Modern Law & Best Practice

Introduction

In the past, a typical commercial agreement would include a single indemnity, often related to intellectual property rights (IPR). Today, however, indemnities are more common and varied. A standard contract now often includes numerous indemnities covering everything from missed SLAs to breaches of contract and even broad protections against any potential wrongdoing by the other party.

But why has this change occurred? If you ask most lawyers about the additional value an indemnity provides over a simple damages claim, many will struggle to offer a clear explanation. Similarly, terms like ‘save and hold harmless’ or ‘indemnify and keep indemnified’ often go undefined in legal drafting, and it is not always clear why these phrases are used (especially when there might be better ways to express these ideas).

In this course, Richard Stephens will explore the key aspects of contractual indemnities through the lens of recent case law, offering practical insights for anyone involved in drafting or litigating indemnity clauses.

What You Will Learn

This course will cover the following:

• When might an indemnity not be an indemnity?
• Distinguishing indemnities from guarantees and on demand obligations
• Relationship of guarantees with indemnities and why it matters
• Identifying other forms of indemnity, including implied and ‘quasi-indemnities’
• Construction of indemnities: Legal principles and practical applications
• What special rules apply to indemnities?
• The current status of contra proferentem and the Canada Steamship guidelines
• Recovering under an indemnity: What you need to know
• Setting conditions for enforcement
• When does the indemnity ‘bite’?
• What can the indemnified do?
• Understanding what is meant by a ‘liability’ or a ‘claim’
• What is possibly irrecoverable under an indemnity? e.g. payment of fines
• Scope: How the courts apply indemnities to claims
• In practical terms, when an indemnity event has arisen, what must the indemnifier do? What must the indemnified do?
• How do the courts apply rules of causation to claims under contractual indemnities? What about remoteness?
• What about concurrent causes of loss - do they invalidate the indemnity?
• Liability issues
• Limiting liability - does it apply to indemnities?
• Is an indemnity seen as a sole remedy?
• Interaction of indemnity provisions with insurance
• When exactly can a claim be made under an indemnity? Does the indemnified party have to wait for the loss to accrue first? Must the indemnified party pay out before making a claim?