Page 6 - CCCA Magazine Fall 2018

Sponsored by
Start ahead when drafting and negotiating indemnifcation provisions with
Practical Law Canada

Practical Law Canada, Commercial Transactions, provides you with a comprehensive suite of
indemnifcation resources to ensure that you have considered all important questions and issues relating
to indemnifcation when negotiating an indemnifcation provision on behalf of your client.

Indemnifcation Indemnifcation Indemnifcation Indemnifcation
(Mutual Long Form) (Unilateral Long (Unilateral; Pro- (Unilateral; Pro-
A long form set of Form) Indemnifed Party) Indemnifying
clauses providing A long form set of A short form set of Party)
for mutual clauses providing clauses providing A short form set of
STANDARD indemnifcation. for unilateral for unilateral clauses providing
CLAUSES indemnifcation. indemnifcation, for unilateral
Discussion on Customized drafted in favour of the indemnifcation,
drafted in favour of
indemnifed party.
Indemnifcation Clauses the indemnifying
party.

by Sharmila K. Irvine, Commercial Transactions
Practice Lead, Practical Law Canada Indemnifcation Clauses in Commercial Contracts
A Note discussing indemnifcation and defence
Sharmila joined Practical Law Canada after serving as General Counsel for a North American provisions in commercial contracts. It defnes
conglomerate, the Norstar and Concordian Group, where she had carriage of all legal matters. PRACTICE indemnifcation and explains how parties often use
Previously, she was Assistant General Counsel to a large multinational, the Miller Group. Prior NOTE indemnifcation to allocate risk.
to that, Sharmila held the position of Director of Legal and Regulatory Affairs and Corporate
Secretary for a North American data and telecommunications company.

Drafting and
Indemnifcation: Key Interaction Between Negotiating an
A contractual indemnifcation clause (or indemnity) is an express agreement by one party to Negotiation Points Chart Indemnifcation and Other Indemnifcation Clause
compensate another party for certain costs and expenses. It is often coupled with a duty to defend A chart summarizing Contractual Remedy A Checklist outlining
Provisions
key considerations
and hold the indemnifed party harmless. Indemnifcation provisions are used in many commercial for negotiating A Checklist of the main issues the main questions to
answer and issues to
agreements, including sale of goods and services, acquisition, outsourcing, distribution and franchise, CHECKLISTS indemnifcation to consider when drafting and consider when drafting
provisions in purchase
negotiating remedial provisions
confdentiality, and consulting agreements. Although commonly used, indemnifcation provisions can and sale transactions to ensure that indemnifcation and negotiating
an indemnifcation
be complex and are often one of the most highly negotiated provisions in a contract. and agreements for and other contractual remedies provision.
the sale of goods and
interact in a consistent and
provision of services. compatible manner.

Through a well-drafted indemnity, parties can:
• Customize risk allocation between themselves to For an indemnifying or breaching party, a carefully
shift the burden of loss and the cost of defending crafted indemnifcation provision can enable it to cap
third its liability or limit its liability with materiality qualifers
party claims. and liability baskets or thresholds. If used improperly, ABOUT PRACTICAL LAW CANADA
an indemnifcation provision can subject a party to Practical Law Canada helps lawyers increase effciency, serve clients and business partners more
• Compensate the indemnifed party for risks it continuing liability for circumstances outside of its effectively, tackle unfamiliar topics, and keep up with legal developments. Our expert team of lawyer-
did not assume and expenses that may not be control. editors creates and maintains up-to-date, practical resources that refect the latest law and practice.
recoverable at common law such as legal fees.
To get full access to the resources listed above, request a free trial at www.practicallaw.ca.
• Minimize the uncertainty regarding the scope of
future potential liabilities.
• Reduce the likelihood of litigation concerning the
allocation of liability between the parties and the
remedies available. © 2018 Thomson Reuters Canada Limited
00250QN-91986-CM