Sample Indemnity Clause With Cap

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Multi-State
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US-0818-WG
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Word; 
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This is a sample form in which the Indemnitor hereby unconditionally and irrevocably indemnifies and agrees to reimburse, defend, exonerate, pay and hold harmless Lender and its directors, officers, policyholders, shareholders, employees, successors, assigns, agents, contractors, subcontractors, experts, licensees, affiliates, lessees, mortgagees, trustees and invitees, from and against any and all Environmental Damages arising from the presence of Hazardous Materials in, upon, about or beneath the Secured Property or migrating to or from the Secured Property, or arising in any manner whatsoever out of the violation of any Environmental Requirements pertaining to the Secured Property and the activities thereon, or the breach of any warranty or covenant or the inaccuracy of any representation of Indemnitor contained in the Loan Documents pertaining to Hazardous Materials or other environmental matters.

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.

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FAQ

Letters of indemnity should include the names and addresses of both parties involved, plus the name and affiliation of the third party. Detailed descriptions of the items and intentions are also required, as are the signatures of the parties and the date of the contract's execution.

Disputed liability cap ?the Supplier's total liability to the Customer? arising out of or in connection with this Agreement (including all Statements of Work) shall be limited to an amount equivalent to 150% of the Charges paid or payable in the preceding twelve months from the date the claim first arose.

An indemnification cap, or cap on an indemnity clause , is a cap on liability. It represents the obligation of a seller to a buyer against breaches of reps and warranties. This cap is the maximum liability under the indemnification stipulations and is stated to a specific dollar amount.

How to Write an Indemnity Agreement Consider the Indemnity Laws in Your Area. ... Draft the Indemnification Clause. ... Outline the Indemnification Period and Scope of Coverage. ... State the Indemnification Exceptions. ... Specify How the Indemnitee Notifies the Indemnitor About Claims. ... Write the Settlement and Consent Clause.

A cap will limit the total potential exposure either party has under an indemnification obligation. For example, in a business sale, often the seller's indemnification liability is capped at some negotiated number. This number limits the maximum amount the seller would owe to the buyer to cure any indemnity claims.

More info

Indemnification Cap. Liability cap clause samples.Indemnification clauses appear in nearly all commercial agreements. Crafted indemnity clause ensures that all parties are adequately protected in case of a dispute or loss. Here's what you should know. Consider the following indemnity clause:. Giver should seek to: ⎻Include a comprehensive sole remedy provision. Not be able to obtain certain types of reimbursement, for example, attorneys' fees. ▫ The breaching party may not be able to adequately: ○ cap its liability;. For example, damages may not be recoverable from a party in respect of a breach of contract if they are too remote.

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Sample Indemnity Clause With Cap