Contractual Indemnities (Hart Studies in Private Law) by Wayne Courtney

Author:Wayne Courtney [Courtney, Wayne]
Language: eng
Format: azw3
ISBN: 9781782253891
Publisher: Bloomsbury Publishing
Published: 2014-11-30T16:00:00+00:00

Part III

Particular Indemnities

6

Claims by or Liabilities to Third Parties: Classification and Establishing Loss

Introduction

[6–1]Purpose of part. Part two was concerned with general principles applicable to promises of indemnity in various forms. This part examines principles and issues of construction that relate to particular forms of indemnity. Four distinct forms are considered: indemnities against claims by or liabilities to third parties; indemnities against claims by or liabilities to the indemnifier; indemnities against breach or non-performance by third parties; and indemnities against breach of contract by the indemnifier.

That division provides a convenient framework for analysing issues specific to different subject-matter. The categories are not, however, mutually exclusive because the defining characteristics are not mutually exclusive. The third and fourth categories are defined by the event giving rise to the loss. The first and second categories are defined by the type of loss. Accordingly, where A promises to indemnify B against breach by A of a contract with B, the indemnity may be intended to protect B against liabilities to C which arise from A’s breach. Alternatively, where A promises to indemnify B against non-performance by C, a possible consequence of C’s non-performance is that B incurs a liability to another, D. On one view,Lloyd v Dimmack1 crossed the first, third and fourth categories: A promised B, the assignor of certain leases, that C, the assignee, would pay the rent and perform the covenants in the leases and promised to indemnify B against default. C’s default in paying rent and performing the covenants caused B to incur liabilities to the lessors and others.

[6–2]Purpose of chapter. This chapter and the next examine the operation of the archetypal non-insurance promise of indemnity: an indemnity against claims by or liabilities to third parties. It is the form of indemnity in respect of which the law is most fully developed. Its distinctive characteristics include the default rules relating to the occurrence of loss and to proof of the indemnified party’s liability. Another important feature is the use of specific enforcement to protect the indemnified party before it suffers loss.

[6–3] Structure of chapter. The structure adopted in this and the following chapter is repeated in later chapters on other forms of indemnity. The chapter begins with a definition of an indemnity against claims by or liabilities to third parties. Considered next is the nature of the promise of indemnity. It will be seen that indemnities in this form are usually construed to require the indemnifier to avoid or prevent loss to the indemnified party. The following section is then concerned with establishing loss under the indemnity. The distinctive rules concerning the occurrence of loss and proof of liability receive extensive treatment. The analysis continues in the next chapter, which considers performance and enforcement of this form of indemnity.

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