Indemnities And ‘As Soon As Possible' Notice

First Published in The Royal Gazette, Legally Speaking, August 2020

Indemnity clauses represent a contractual transfer of risk between parties to a transaction, the purpose of which is to prevent loss to one of the parties or to compensate that party for losses that may occur as a result of a specified event.

They may cover all losses or liabilities, or be restricted by the scope of the clause to certain types of loss, and may also cap the maximum liability of one party to another under the clause.

Indemnity clauses play an important role in managing the risks that may come with certain transactions and are commonly found in commercial contracts.

An indemnity claim in a business purchase context formed the basis of a recent English High Court case, Towergate Financial v Hopkinson&Howard.