Commercial contracts are common practice when establishing customer, supplier or contractor relationships.
They will generally include mechanisms of allocating or altering risk, by which one party (e.g. principal) seeks to transfer all or part of their liability to another party (e.g. contractor).
The most common types of clauses include:
- Clauses which impose a higher standard of care or a more onerous measure of damage;
- Indemnity clauses which require one party to pay the liabilities, costs, expenses and loss of the other party that arise from the performance of the contract;
- Releases by which one party agrees to release the other party (invariably the principal) from liability.
It is also common for commercial contracts to contain insurance clauses which require one party to arrange a specified type and level of insurance in respect of obligations connected with the contract. Often such clauses will require that the cover extends to certain obligations of the principal, head contractors, subcontractors and others.
It is important to understand these clauses and their interaction with each other when assessing your insurance needs.
Core Essentials Guide
The Core Essentials Guide is intended to highlight the areas of risk and potential pitfalls before you enter into a commercial contract, and which should be identified to help ensure appropriate insurance cover is obtained.
- This pack provides you with the basic knowledge and tools you need to navigate through and make commercial decisions regarding your protection. The Core Essentials Guide is not intended to be definitive given the broad and complex nature of these types of contracts and area of law.
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