A sample indemnity clause with a cap is a legal provision commonly included in contracts to allocate the risk of liabilities and protect parties involved from potential losses. It outlines the responsibility of one party (the indemnity) to compensate or defend the other party (the indemnity) against certain specified risks or claims. Indemnity clauses with caps typically limit the total amount of indemnification or liability that the indemnity is obligated to pay. This establishes an upper limit on the indemnity's financial responsibility, providing a level of protection against excessive or unforeseen costs. The cap can be expressed as a fixed amount, a percentage of the contract value, or linked to specific factors agreed upon by both parties. There are different types of sample indemnity clauses with caps that can be tailored to suit the specific needs and context of a contract. These variations include: 1. Financial Cap: This type of indemnity clause limits the indemnity's liability to a specific monetary amount. For example, the indemnity may be responsible for indemnifying the indemnity up to a maximum of $100,000. 2. Proportional Cap: In this case, the indemnity clause sets a cap as a percentage of the contract value or the damages incurred. For instance, the indemnity's liability may be limited to 10% of the contract value or the actual damages, whichever is lower. 3. Time-Limited Cap: This type of indemnity clause imposes a cap that gradually reduces or expires over a specified period. For example, the indemnity's liability may be capped at $1 million for the first year, $500,000 for the second year, and so on, until it eventually reaches zero. 4. Aggregate Cap: An aggregate cap limits the total liability of the indemnity over the entire term of the contract. This means that the indemnity's responsibility is capped at a specific amount regardless of the number of claims or events that trigger indemnity. 5. Dual Cap: A dual cap incorporates two separate caps, usually distinguishing between different types of liabilities or categories of claims. For example, the indemnity's liability for bodily injury claims may be capped at $500,000, while their liability for property damage claims may be capped at $1 million. It's important for parties drafting or reviewing contracts to carefully consider the nature of the risks, the potential indemnity costs, and negotiate suitable caps that adequately safeguard their respective interests. However, it is advisable to consult legal experts to ensure the indemnity clause meets legal requirements and addresses specific contractual needs appropriately.