Indemnities and contractual defences

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The English court has held that a contractual requirement for an indemnified party to notify its indemnifier of a relevant claim within 20 business days did not operate as condition precedent to compensation under the indemnity.

Under contracts governed by English law, an indemnity is a contractual promise made by the indemnifying party to the indemnified party to compensate the indemnified party if it incurs liability under a specific type of claim (e.g. infringement of a third party’s intellectual property).

Put simply, an indemnity elevates the relevant risk so that the indemnified party enjoys increased potential compensation for the relevant event or claim. It follows that the indemnifying party is exposed to more financial risk under an indemnity than would be the case under an ‘ordinary’ breach of contract claim…

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