A Master Supply Agreement governs the ongoing supply of goods between buyer and supplier, setting pricing, logistics, and quality standards. This playbook provides insights into balancing continuity of supply, cost control, and contractual accountability.
Why This Matters: Unbounded or one-sided indemnities can expose a party to unlimited financial obligations, undermining risk management and potentially threatening solvency.
Negotiation strategy
If you're the Buyer:
Ensure the indemnity clause includes clear scope, triggers, and caps. Advocate for carve-outs for gross negligence or willful misconduct to limit exposure.
If you're the Supplier:
Negotiate for a balanced indemnity clause that provides mutual protection. Ensure exclusions for gross negligence or willful misconduct are included.
Essential elements
1
Indemnity Scope
Defines the extent of indemnity.
2
Carve-Outs
Exclusions for specific liabilities.
3
Jurisdiction Compliance
Adapts terms to local laws.
Action framework
ACCEPT
Propose edits when the clause lacks balance or necessary carve-outs.
EDIT
Reject if the clause exposes to unlimited liability without exclusions.
ADD
Add language if indemnification is missing or inadequate.
PRO TIP
Always consult local legal experts for jurisdiction-specific indemnification requirements.
Example clauses
FAVORABLE
Preferred Indemnification Clause
"The parties agree to indemnify each other against third-party claims, excluding those arising from gross negligence or willful misconduct."
NEUTRAL
New York Compliance Clause
"Ensure compliance with New York indemnification standards."
UNFAVORABLE
Unlimited Liability Clause
"The Contractor shall indemnify the Company for all claims without limitation."
Fallbacks
High-Risk Projects
In high-risk projects, ensure indemnity clauses are robust with specific caps and exclusions to manage potential liabilities effectively.
Cross-Border Transactions
For cross-border deals, adjust indemnity terms to align with international laws and mitigate jurisdictional risks.
Technology Agreements
In tech contracts, focus on indemnities related to IP infringement and data breaches, ensuring clear responsibilities and protections.
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WEEK 2
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WEEK 3
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WEEK 4
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