In order to avoid ambiguity, the terms should be used in a targeted manner. And for a compensation member to enjoy full protection, the three terms should be used collectively, for example: « A agrees to fully compensate B, to keep it compensated, and to defend it (collectively` compensate »). The delineation of control and error zones Among the most common types of loss subject to compensation are the violation of warranties or guarantees; breach of contract; losses incurred under certain conditions; and third party claims for product defects. Parties should be wary of overly broad or ambiguous indemnification clauses that trap the indemnification subject even if he or she has not breached the contract or was not guilty in any other way. For example: • « any liability arising out of or in connection with the services provided under this Agreement » • « any act or omission of X or any of its collaborators or representatives, including but not limited to… • « any intentional act related to the production or distribution of the products » in a balanced and clear contract; Parties should only guarantee and compensate for things under their control. The obligations of each party should be clear in the supply agreement. Similarly, the compensation provision should define the types of errors that could reasonably occur and be defined and put out to competition as being attributable to a particular party. One party may not be able or wants to take on certain responsibilities – suppliers may have riskier obligations as part of a delivery agreement, although the brand may have the bag lower. When revising the language of compensation, each party should take into account the most serious scenario possible under the agreement and determine the level of associated risk. Obviously, each party wants to minimize its risks.
The factors to be taken into account in the allocation of risks are: • Who would be responsible for the loss? Who is best placed to control/reduce risk? Where compensation is delimited by areas of control and error, it should be easily acceptable to each party. • What is the usual practice of the sector? • Who has the power to negotiate? • Who is best placed to insure against risk? The insurance indemnity provisions should reflect the insurance coverage of the parties. In other words, the proof of compensation for a type of loss should be the one who receives insurance for that loss and should designate the indemnitee as an additional insured. Compensation cannot be as strong as the insurance that the party must insure, especially if the indemnity contractor is a small business with limited assets. The additional insurance status gives the beneficiary the right to assert claims directly against the insurer of the person subject to compensation, which may include the right to immediate defence and the prevention of a recovery dispute between the parties. It is important for a lawyer to review the directive to ensure that it covers the nature of the loss envisaged and that it would contain sufficient limits. General liability policies cover consumer claims for bodily injury or property damage. They will likely cover very little, if any, of the costs associated with food recalls. There are a large number of special policies to cover losses related to food recalls, for example.B. for the following insured events: actual contamination, product handling and harmful advertising. These special guidelines should also be carefully reviewed by a lawyer – there are often exclusions that could render them virtually worthless. For example, a directive should cover not only cases where there is evidence of actual contamination, but also « reasonable grounds to believe » that there could be contamination – given that food companies may be asked by the U.S.
Food and Drug Administration to carry out a recall before there is evidence of contamination. . . .