Page 136 - RISK Management IC 86

Risk Management

attention and agreement of the other party during the
course of negotiations leading up to the formation of the
contract. Once the contract terms are agreed upon, one
party cannot seek to introduce fresh terms.

According to the doctrine of privity of contract, only the
parties to a contract can be bound by indemnity and
exclusion clause. For e.g, if A agrees to do some work
for B subject to some clause in the contract that A shall
accept the liability for any injury to third parties arising
out of performance of the work, the aggrieved third
party can very well claim against B for negligence of A.
B then has to safeguard himself if he has agreement
with A, (i) to indemnify him for any injury, damage or
loss arising out of its performance (iii) and to insure
against such liability.

On many cases, both the exclusion clauses and the
indemnity clauses become subject to closer scrutiny and
strict interpretation by the courts. Generally, public
opinion tends to go against big companies, seeking to
avoid legal liabilities. So, even though exclusion clauses
and liability clauses are not illegal, the courts hold them
strictly against the party seeking to take advantage of

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