Key Contact:

Michael Carey

Key Contact:

Michael Carey

Unlimited indemnity … unlimited risk

By: Michael Carey

Corporations are increasingly using standard form agreements to conduct business with their suppliers. If your client is faced with a standard form agreement, there are several pitfalls to watch for, not least of which is an unlimited indemnity.

A standard form agreement provides several benefits to the corporation that drafts it. First, management and the corporation’s lawyers predetermine what terms and level of risk the corporation is willing to accept. Second, it eliminates the need for protracted contractual negotiations. Third, it minimizes the legal costs associated with back-and-forth negotiations. If the standard form agreement is accepted, further legal review by the corporation’s lawyers will not be required.

However, a standard form agreement often contains terms that are not commercially reasonable from the supplier’s perspective. If the agreement contains an indemnity, signing it may significantly increase the risk to your client.

This article was originally published in the November 2021 issue of Canadian Underwriter (pg 34). To view the complete article, please visit Canadian Underwriter online.

This article is not intended to serve as a comprehensive treatment of the topic and is not legal advice. All legal matters are dealt with pursuant to their specific facts and circumstance. Nothing replaces retaining a qualified, competent lawyer.