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 are explained. 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 other.