Challenge the fear of drafting: ‘indemnity’

Adrian C. Laing

My experience with the drafting and amending of contracts is that sometimes lawyers are the best ‘types’ to address the sensitivities involved but often the skill-set needed to reach mutually acceptable terms is more editorial or commercial in nature. Even a creative leaning can be more useful than the near-pedantry of a legally trained draftsperson.

Lawyers are naturally protective over certain phrases or words which carry legally-loaded inferences and what may feel like life-threatening financial implications. Drafting indemnity provisions is often thought to be a ‘lawyer-only’ zone. However, the principle is quite simple: ‘indemnity’ has come to mean protection or security against losses, damages and costs, often expressed in the phrase ‘to hold harmless’.

The real issue with an indemnity provision is that a few words in the right place at the right time can have an enormous effect on the consequences that may follow an unchallenged ‘boiler-plate’ indemnity provision.

A ‘routine’ indemnity provision can have dire consequences and sometimes may as well state: ‘we hereby give you a blank cheque to defend any and all claims and allegations no matter how unreasonable or frivolous they may be’.

So, think of simple – and reasonable – wording that would prevent the ‘blank cheque’ scenario such as: ‘except claims which are frivolous or un-meritorious’ or ‘subject to the licensor’s approval such approval not to be unreasonably withheld or
delayed’.

You may wish to impose time limits, financial constraints, territorial boundaries or even seek to eliminate ‘mere’ allegations as opposed to ‘sustainable legal grounds’. Such drafting matters are not the exclusive province of lawyers. A tight, disciplined contract may seek to tie in very closely specific warranties to co-related indemnities and appear ‘un-amendable’ but often reasonable consideration will be given to sensible objections. If revised wording appears to create an impasse then attention should be given to one or both parties resolving the issue with an ‘all media risks’ type of insurance policy.

But the real challenge is to think though scenarios and be confident enough to say what concerns you and suggest wording which allays your fears. Never worry about how far out and ridiculous your concerns may sound to another. Real life is more unpredictable
and further ‘far-out’ than most works of fiction. In fact you may even recall that  great Hollywood film about as unlikely an insurance scenario as you could imagine called: ‘Double Indemnity’.

9781780431963 9781780434797 9781780438238

Adrian C. Laing is co-author with Deborah Fosbrook of The A-Z of Contract Clauses, Sixth Edition, The Media and Business Contracts Handbook, Fifth Edition, and Contract and Copyright Drafting Skills.

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