This form provides boilerplate contract clauses that outline means of securing the funds for payment of any indemnity, including use of an escrow fund or set-offs.
An Arizona indemnity provision is a contractual agreement that outlines the means of securing the payment of indemnity in a specific situation. This provision is commonly found in contracts involving high-risk activities or agreements where one party assumes liability on behalf of another party. The primary purpose of an indemnity provision is to protect the indemnity (the party being indemnified) from financial loss or legal responsibility arising from a specific event or circumstance. In Arizona, there are different types of indemnity provisions used to secure payment, depending on the nature of the agreement. 1. General Indemnity Provisions: These provisions establish a broad indemnity obligation, where one party agrees to indemnify and hold harmless the other party for any loss, damage, or liability arising out of the contract. This type of provision is often used in commercial contracts, construction agreements, and service contracts. 2. Limited Indemnity Provisions: In certain situations, parties may want to restrict the scope of the indemnity obligation. A limited indemnity provision specifies the specific types of loss, damage, or liability for which the party will be responsible. This is commonly used when the indemnity (the party providing indemnification) wants to limit their liability to only certain types of harm or claims. 3. Comparative Fault Indemnity Provisions: In Arizona, comparative fault is a doctrine used to assign liability based on the percentage of fault each party contributed to an incident. In contracts involving this provision, the parties agree to indemnify each other based on their respective share of fault. This provision is often used in construction contracts and other high-risk agreements where multiple parties share responsibility for potential losses. To secure the payment of indemnity, Arizona indemnity provisions may include several mechanisms: 1. Insurance Requirements: The contract may require the indemnity to obtain and maintain specific types and amounts of insurance coverage to cover potential indemnity obligations. This ensures that the indemnity has the financial means to fulfill their indemnity obligations. 2. Performance Bonds: In certain contracts, the indemnity may be required to provide a performance bond or surety bond. This bond acts as a guarantee that if the indemnity fails to fulfill their indemnity obligations, the bondholder will step in and cover the losses. 3. Escrow Accounts or Security Deposits: In some cases, the parties may agree to establish an escrow account or require a security deposit to secure the payment of indemnity. The funds held in the account or deposit can be used to compensate the indemnity for potential losses. In conclusion, an Arizona indemnity provision provides a legal framework for securing the payment of indemnity in contractual agreements. Different types of provisions, such as general, limited, or comparative fault provisions, may be used depending on the agreement's specifics. To ensure the payment of indemnity, mechanisms like insurance requirements, performance bonds, or escrow accounts may be employed. These provisions act as crucial risk management tools, protecting parties involved in high-risk activities or agreements from potential financial losses or liabilities.
