A contract is an agreement in which each party promises to do something for the other party. Usually, one party agrees to provide goods or services while the other party agrees to pay for those goods or services. Unfortunately, during the performance of the contract, one of the parties may be negligent and cause damages to a third-party. Which party is responsible for paying those damages? Generally, the law imposes responsibility on the company that caused the damages. However, contractual risk transfer principles allow the parties to change that result by contract. Through contractual risk transfer, the parties can agree before a loss which party will bear responsibility for payment (indemnification) of the damages. That result can be achieved by requiring contractors, suppliers and others to protect your business against lawsuits arising from the products or services by use of an indemnification (indemnity) clause in the business contract . . . For the balance of these materials, please see http://slidesha.re/bGWfq9
NOTE: This blog is for informational purposes only. By reading it, no attorney-client relationship is formed. The law is constantly changing and if you want legal advice, please consult an attorney licensed in your jurisdiction. © All rights reserved. 2010.