Indemnities in commercial contracts: your questions answered Webinar – 8 February 2017

Presenters Rob Beardmore Senior Editor Sara Catley Director, In-House Editorial Natalie Salunke European Counsel, Enterprise Holdings *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers.

What is an “indemnity”? No magic in the word “indemnity” Key components: a promise to pay another business / group for a loss suffered or an expense incurred if a specified event occurs Must define two elements: trigger event payment Distinction from guarantees *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers.

Question When do you need an indemnity in a commercial contract and how do you approach negotiation? *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers. Edit presentation title on Slide Master using Insert > Header & Footer

Answer When do you need an indemnity in a commercial contract and how do you approach negotiation? All businesses different – no one size fits all Risk management approach -> “easy to deal with” Business model / industry practice Key negotiation scenarios: Indemnity for “breach of contract”. Does it add anything? Negligent performance IP Defective goods TUPE, etc. Consumer contracts – treat with caution *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers. Edit presentation title on Slide Master using Insert > Header & Footer

Answer When do you need an indemnity in a commercial contract and how do you approach negotiation? Approaching negotiation Don’t get flustered - break it down No “one size fits all” Be aware of bargaining position Challenge for the right reasons Be careful what you wish for Risk assess Ask for help *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers. Edit presentation title on Slide Master using Insert > Header & Footer

Question We always demand an indemnity when we want to have a remedy without the cost, time and uncertainty involved in proving a claim in damages. Does an indemnity really improve our position in the event of a claim? *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers. Edit presentation title on Slide Master using Insert > Header & Footer

Answer Does an indemnity really improve our position in the event of a claim? Remoteness and mitigation likely to still apply Other common law hurdles: proof of loss, etc. Risks of ambiguous / broad wording (see Wood v Sureterm Direct Ltd.) Indemnified should have enforcement in mind Indemnity a “roadmap to recovery” of defined loss *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers. Edit presentation title on Slide Master using Insert > Header & Footer

Question How can I neutralise an indemnity, so I don’t have to pay out excessive claims?” *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers. Edit presentation title on Slide Master using Insert > Header & Footer

Answer How can I neutralise an indemnity, so I don’t have to pay out excessive claims?” If the counterparty refuses to remove, attempt to draft around the risks of a debt claim Remoteness Mitigation Causation Proof of loss Assessment procedure in litigation / conduct Limitation of liability Restrict number of beneficiaries Negligence-based and deal with contributory fault “Reasonable” and “direct” *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers. Edit presentation title on Slide Master using Insert > Header & Footer

Question I am getting bogged down with references to “indemnity”, “hold harmless” and “defend”. Please could you clarify the meanings and consequences of these?” Edit presentation title on Slide Master using Insert > Header & Footer

Answer Indemnify, defend and hold harmless If the counterparty refuses to remove, attempt to draft away or draft around the advantages identified in the previous question: All interpretation depends on the clause, the contract and the context. No wording has a fixed meaning in all contexts. Authority is scarce and sometimes contradictory Garner’s Dictionary of Legal Usage (2011) proves indemnify = hold harmless Say expressly what you mean to cover (and exclude anything else?) Edit presentation title on Slide Master using Insert > Header & Footer

Question As suppliers, we have to give a lot of indemnities and we need to limit the scope as far as possible. I am looking for ways to minimise exposure to risk. We sometimes carve out consequential losses or cap liability, but would this be unenforceable as going against the nature of the indemnity? *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers. Edit presentation title on Slide Master using Insert > Header & Footer

Answer Can you limit liability under an indemnity? Should you? Yes – you can Limit what you are indemnifying for Limit who is indemnified Limit the duration Conduct of claims provisions Financial limits Sole and exclusive remedy? Right to set off Pricing *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers. Edit presentation title on Slide Master using Insert > Header & Footer

More Information See Practical Law practice notes: – Contracts: indemnities – Contracts: debt and damages, liquidated and unliquidated claims. See Practical Law standard clause: – Indemnity *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers.

THANK YOU FOR ATTENDING *Nothing in this webinar shall be taken to constitute legal advice. None of the Editorial team providing responses to webinar questions are practising solicitors or barristers.