Understanding Indemnity Clauses
(ISBN 0 9581 452 02)
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The aim of this book is
to give managers and employees dealing
with contracts a broad understanding of
the nature of indemnities and their potentially
devastating effects, particularly when
they are not properly scrutinised and
understood prior to their acceptance.
Conversely, it will become apparent
that when put to use properly and intelligently, indemnity
clauses can also be a very effective and powerful safeguard,
or can be used as a tool to transfer or outsource risk
to another party in a transaction.
It is surprising how some managers have only a rudimentary
understanding of the concept of an indemnity. Indeed
some of these managers have been encountering and reading
indemnities for many years, often without an appreciation
of their full significance.
Preventative measures and safeguards as well as ways
of transferring risk to others will gain greater emphasis
as directors will need to protect and shield themselves
from personal liability.
No director wants to be exposed to personal liability
because they committed their company to unduly onerous
indemnities, without an appreciation of their consequences.
In the face of society's increasing litigiousness, the
situation can only deteriorate.
These factors combine to make a fundamental understanding
of indemnities more relevant than ever.
Through the use of examples, the differences between
fair indemnity clauses and those that are unduly onerous
Through the explanations provided, the reader will begin
to understand what factors account for these differences
and how to spot them.
Demonstrations of how indemnities are used to outsource
or transfer risk to other parties are provided together
with commentary on when it is appropriate to do so.
Also considered are the interaction of indemnities and
insurance and why it is unwise to have one without the
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