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PLAYBOOK TEMPLATES

Guarantee & Security Agreement

A Guarantee & Security Agreement provides collateral and personal guarantees securing performance or payment obligations. This playbook details drafting considerations for enforcement rights, perfection, and priority of security interests.

Indemnities and Liability Caps

Why This Matters: Unlimited or unclear indemnities can expose parties to substantial unpredictable losses. Well-defined caps and triggers contain risk and premium expenses.

Negotiation strategy

If you're the Lender:

Negotiate for specific indemnity triggers and clearly defined excluded liabilities. Ensure aggregate caps reflect acceptable risk levels and align with the company's risk management strategy.

If you're the Borrower:

Advocate for reasonable indemnity triggers and exclusions that protect against excessive liability. Propose aggregate caps that are fair and consistent with industry standards.

Essential elements

1

Indemnity Triggers

Specific events triggering indemnity.
2

Excluded Liabilities

Liabilities not covered by indemnity.
3

Aggregate Caps

Maximum liability limit.

Action framework

ACCEPT

Propose edits when indemnity triggers or caps do not align with business goals.

EDIT

Reject clauses that expose parties to unlimited liability or lack clear exclusions.

ADD

Add clauses when indemnity and liability caps are missing or insufficient.

PRO TIP

Always ensure indemnity clauses are jurisdiction-specific to comply with local legal standards.

Example clauses

FAVORABLE

Preferred Indemnity Clause

"The indemnifying party shall indemnify the indemnified party against all losses arising from third-party claims, subject to an aggregate liability cap of [amount]. Excluded liabilities include [specific exclusions]."
NEUTRAL

Standard Indemnity Clause

"Indemnification shall be provided for losses arising from third-party claims, with an aggregate cap of [amount]."
UNFAVORABLE

Unlimited Indemnity Clause

"The indemnifying party shall indemnify the indemnified party against all losses without any cap or exclusions."

Fallbacks

High-Risk Projects

In high-risk projects, indemnity clauses should include higher caps and more specific triggers to address the increased potential for claims.

Cross-Border Transactions

Cross-border transactions require indemnity clauses that account for varying legal standards and potential jurisdictional conflicts.

Technology Contracts

Technology contracts may necessitate indemnity clauses that specifically address intellectual property claims and data breaches.
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