Sample Integrated Liability Clauses

Transcription

1 Getting the Most of Other People's Insurance: Sample Integrated Liability Clauses November 19, 2015 Webinar Lawrence G. Theall David Badurina Brian Rosenbaum CAUTION TO READER: The sample clauses in this book are not intended as legal advice and should only be used as suggestions to consider in the drafting and negotiation of a contract. You should obtain and rely upon the advice of lawyers. It is important that clauses be drafted to address the unique individual aspects of any particular contractual relationship

2 INTEGRATED LIABILITY CLAUSE [PROFESSIONAL SERVICES LOW RISK] ARTICLE 7 INDEMNITY, INSURANCE AND LIMITATION OF LIABILITY 7.1 The Supplier hereby agrees at all times to indemnify and hold harmless the Indemnified Parties from and against any and all claims, allegations, actions, suits, demands, proceedings, obligations, liabilities, losses, costs, professional fees (including all legal fees and disbursements on a solicitor and own client scale), expenses or damages (including direct, indirect, consequential or special damages), by whomever made, sustained, brought or prosecuted, whether based in contract, tort, fiduciary duty or any other right at law or in equity, occasioned by, arising out of, or in any way related to, this Agreement, which may be brought or made against the Indemnified Parties or which the Indemnified Parties may suffer, sustain, pay or incur, even if such arises in whole or in part from the negligence of the Indemnified Parties. 7.2 The Supplier shall have in place, at its own cost and expense, all the necessary and appropriate insurance that a prudent person in the business of the Supplier would maintain, which includes, but is not limited to: (a) commercial general liability insurance with limits of not less than $*,000, and a deductible of not more than $*0,000.00, per occurrence, and no aggregate limits; (b) Professional Liability (Errors & Omissions) Insurance, with limits of not less than $*000,000, each claim and a deductible not greater than *0, each claim. If the policy is placed on a claims-made basis, it shall have no retroactive date and must include a 24-month extended reporting period, severability of interest with respect to each insured, and waiver of subrogation against all Indemnified Parties. The policy must also provide that breach of any of the terms or conditions of the policy, or any negligence or wilful act or omission or false representation by an insured or any other person, shall not invalidate the insurance for the purpose of providing coverage to, and paying any claims by, the Indemnified Parties. All such insurance shall be primary insurance without right of contribution from any insurance carried by the Indemnified Parties, and will provide that it may not be cancelled or materially changed except upon thirty (30) days prior written notice to the Indemnified Parties. Before commencing the Services contemplated by this Agreement, the Supplier shall provide the Indemnified Parties with valid certificates of insurance that confirm the foregoing coverage is in place. NOTE: IF PRACTICAL, THE INDEMNIFIED PARTIES SHOULD BE AN ADDITIONAL INSURED ON THE CGL POLICY BUT NEVER ON AN E&O POLICY NOTE: SECTION 7.3 LIMITS LIABILITY OF THE SUPPLIER. THIS SHOULD NOT BE USED UNLESS REQUIRED AS A RESULT OF NEGOTIATIONS. THE LIMITATION SHOULD NOT BE LESS THAN THE REASONABLY FORESEEABLE LOSSES ARISING FROM CLAIMS AND DAMAGES COMMONLY ASSOCIATED WITH THE CONTEMPLATED GOODS AND/OR SERVICES 7.3 The Supplier s liability to the Indemnified Parties for Damages, arising from any breach or series of breaches of this Agreement, or otherwise related to this Agreement, shall not exceed [$00.00], provided however that this shall not in any way restrict or limit the indemnities provided for in section 7.1 as they relate to claims or demands by a third party.

3 INTEGRATED LIABILITY CLAUSE: PROFESSIONAL SERVICES (MEDIUM RISK) DEFINITIONS Claims includes any and all claims, allegations, actions, suits, demands, proceedings, obligations, liabilities by whomever made, sustained, brought or prosecuted, whether such claims are based in contract, tort, fiduciary duty or any other right at law or in equity; Damages includes direct, incidental, indirect, consequential and special damages or any loss of use, revenue or profit (by any person, entity or organization), losses, judgments or orders (including awards of costs against Indemnified Parties), and all expenses of any kind incurred by Indemnified Parties (including all professional fees and legal fees and disbursements (all on a solicitor and own client scale)); Deliverables means [to be defined] Indemnified Parties mean [your company/entity; consider any subsidiaries, parent or related companies, successors, assigns, predecessors, directors/officers, agents, appointees or employees]; Services means all services and work to be provided or performed pursuant to this Agreement and includes everything that is necessary to be done, supplied or delivered; Supplier means the [Contracting Party]; ARTICLE 7 INDEMNITY, INSURANCE AND LIMITATION OF LIABILITY 7.1 The Supplier hereby agrees at all times to indemnify and hold harmless the Indemnified Parties from and against any and all Claims and/or Damages occasioned by, arising out of, or in any way related to, this Agreement, which may be brought or made against the Indemnified Parties or which the Indemnified Parties may suffer, sustain, pay or incur, even if such Claims or Damages result in whole or in part from the negligence of the Indemnified Parties. Upon receiving written notice of any Claim from the Indemnified Parties, the Supplier shall acknowledge in writing that it has assumed the defence, and shall defend, at its own costs, the Indemnified Parties against any and all Claims. The Supplier shall be entitled to appoint counsel, provided that the choice of counsel is reasonably satisfactory to the Indemnified Parties. The Indemnified Parties shall co-operate fully with, and assist the Supplier in, the defence against such Claims in all reasonable respects. The Supplier shall keep the Indemnified Parties fully apprised at all times as to the status of the defence. The Supplier does not have the authority or the right to compromise any claim, acknowledge any liability or agree to any judgement or settlement, on behalf of the Indemnified Parties, without the prior written approval of the Indemnified Parties. 7.2 Supplier hereby agrees to put in effect and maintain, for the duration of this Agreement, at its own cost and expense, with insurers acceptable to the Indemnified

4 Integrated Liability Clause: Professional Services (Medium Risk) 2 Parties, all the necessary and appropriate insurance that a prudent person in the business of the Supplier would maintain including, but not limited to, the following: (a) Commercial General Liability Insurance, on an occurrence basis, for third party bodily injury, personal injury and property damage, which include limits of not less than $*,000, per occurrence, and a deductible of not more than $*0,000.00, per occurrence, with no aggregate limits. The Indemnified Parties must be additional insureds with respect to all liability arising directly or indirectly from, or in any way relating to, the Agreement, including without limiting the foregoing, vicarious liability for the acts and omissions of the Supplier, and the policy must include blanket contractual liability coverage, cross liability and severability of interest, and such other provisions as the Indemnified Parties may reasonably require. This insurance shall be primary insurance without right of contribution from any insurance carried by the Indemnified Parties, and will provide that it may not be cancelled or materially changed except upon thirty (30) days prior written notice to the Indemnified Parties. (b) Professional Liability (Errors & Omissions) Insurance, covering the Supplier, its employees, agents and independent contractors working for the Supplier (if permitted by this Agreement), for losses arising out of any error or omission in the rendering of, or failure to render, professional services and any other services in connection with this Agreement. Coverage under this insurance shall have limits not less than $*000,000, for each claim and in the aggregate annually, as well as a deductible not greater than *0, for each claim [NOTE: Another option would be to have the deductible the greater of $10,000 or 2% of the Supplier s gross revenues]. If the policy is placed on a claims-made basis, it shall have no retroactive date and must include a 24-month extended reporting period, severability of interest with respect to each insured, and waiver of subrogation against all Indemnified Parties. The policy must also provide that breach of any of the terms or conditions of the policy, or any negligence or wilful act or omission or false representation by an insured or any other person, shall not invalidate the insurance for the purpose of providing coverage to, and paying any claims by, the Indemnified Parties. This insurance shall be primary insurance without right of contribution from any insurance carried by the Indemnified Parties. (c) Employee Dishonesty Insurance written on policy Form A, covering all employees of the Supplier and independent contractors working for the Supplier (if permitted by this Agreement) and shall deem property of the Indemnified Parties to be property of the Supplier, for the purposes of coverage. This insurance must have a minimum policy limit of $*0,000, for each claim and in the aggregate annually, and the deductible shall be not greater than $*0, per claim. The policy must also include a waiver of subrogation against all Indemnified Parties, coverage for loss inside and outside the premises, money orders and counterfeit paper currency, depositor s forgery, third party computer and funds transfer fraud, credit card forgery, employee dishonesty, and incoming cheque forgery. This insurance shall be primary insurance without right of contribution from any insurance carried by the Indemnified Parties.

5 Integrated Liability Clause: Professional Services (Medium Risk) Proof of Insurance - The Supplier shall provide the Indemnified Parties with valid certificates of insurance that reference this Agreement and confirm the required coverage, before commencing the Services contemplated by this Agreement, and further certificates not less than thirty (30) days prior to expiration of any current policy. Upon request, Supplier will provide certified copies of each insurance policy to the Indemnified Parties. The Supplier shall ensure that each of its subcontractors complies with the insurance requirements set out in this Agreement by obtaining similar types of insurance and providing the Indemnified Parties with proof of the acquisition and maintenance of such insurance. 7.4 Proof of WSIB Coverage If the Supplier is subject to the Workplace Safety and Insurance Act (WSIA), it shall submit a valid Workplace Safety and Insurance Board (WSIB) clearance certificate of WSIA coverage prior to the commencement date of this Agreement, and whenever requested by the Indemnified Parties from time to time. 7.5 If Supplier fails to obtain, maintain, or pay premiums for, the required insurance, the Indemnified Parties shall have the right, in addition to and not in substitution for any other right it may have pursuant to this Agreement or otherwise at law or in equity, to pay any such amounts and/or obtain alternate or supplementary insurance and all costs, expenses and other outlays so incurred may be deducted from any amounts due and owing to the Supplier. No such insurance taken out by the Indemnified Parties shall relieve the Supplier of its obligations to insure hereunder. 7.6 The Indemnified Parties will not be liable for any personal injury (including death) or damage suffered by the Supplier, its employees, agents or independent contractors, or for any loss or damage to the property of the Supplier, based upon, occasioned by or in any way related to any services performed, purportedly performed or required to be performed by the Supplier under the Agreement, except to the extent caused by the intentional acts of a director, officer, employee or agent of the Indemnified Parties while acting within the scope of his or her employment. [IN SOME CASES IT MAY BE ACCEPTABLE TO ALSO INCLUDE NEGLIGENCE OF THE INDEMNIFIED PARTIES] NOTE: SECTION 7.7 LIMITS LIABILITY OF THE SUPPLIER. THIS SHOULD NOT BE USED UNLESS REQUIRED AS A RESULT OF NEGOTIATIONS. THE LIMITATION SHOULD NOT BE LESS THAN THE REASONABLY FORESEEABLE LOSSES ARISING FROM CLAIMS AND DAMAGES COMMONLY ASSOCIATED WITH THE CONTEMPLATED GOODS AND/OR SERVICES 7.7 The Supplier s liability to the Indemnified Parties for Damages, arising from any breach or series of breaches of this Agreement, or otherwise related to this Agreement, shall not exceed [$00.00] the limitations provided in this section 7.7 shall not in any way restrict or limit the indemnities provided for in section 7.1, with respect to Claims or Damages relating to third party Claims. Nothing in this Section 7.7 shall have the effect of waiving the obligation of the Supplier to maintain insurance pursuant to this Article 7

6 Integrated Liability Clause: Professional Services (Medium Risk) 4 or of limiting the Supplier s liability for breach of such obligations. 7.8 The parties agree that the limitations contained in this Article 7 are reasonable in scope and that the terms and conditions of this Agreement have been negotiated taking into account such limitations. It is expressly acknowledged and agreed that the parties intend to provide for the efficient and economic allocation of the risks associated with, or in any way related to, this Agreement.

7 INTEGRATED LIABILITY CLAUSE [PROFESSIONAL SERVICES HIGH RISK] DEFINITIONS Claims includes any and all claims, allegations, actions, suits, demands, proceedings, obligations, liabilities by whomever made, sustained, brought or prosecuted, whether such claims are based in contract, tort, fiduciary duty or any other right at law or in equity; Damages includes direct, incidental, indirect, consequential and special damages or any loss of use, revenue or profit (by any person, entity or organization), losses, judgments or orders (including awards of costs against the Indemnified Parties), and all expenses of any kind incurred by the Indemnified Parties (including all professional fees and legal fees and disbursements all on a solicitor and own client scale); Deliverables means [to be defined] Indemnified Parties mean [your company/entity; consider any subsidiaries, parent or related companies, successors, assigns, predecessors, directors/officers, agents, appointees or employees]; Services means all services and work to be provided or performed pursuant to this Agreement and includes everything that is necessary to be done, supplied or delivered; Supplier means the [Contracting Party]; ARTICLE 7 INDEMNITY, INSURANCE AND LIMITATION OF LIABILITY 7.1 The Supplier hereby agrees at all times to indemnify and hold harmless the Indemnified Parties from and against any and all Claims and/or Damages occasioned by, arising out of, or in any way related to, this Agreement, which may be brought or made against the Indemnified Parties or which the Indemnified Parties may suffer, sustain, pay or incur, even if such Claims or Damages result in whole or in part from the negligence of the Indemnified Parties. 7.2 The Indemnified Parties shall provide reasonably prompt notice to the Supplier in writing of the matters in respect of which the indemnities may apply and of which the Indemnified Parties have knowledge. Any failure to provide reasonably prompt notice once the Indemnified Parties have knowledge will relieve the Supplier of its indemnity obligations hereunder, but only to the extent that the rights of the Supplier are prejudiced by such failure. In any such notice, the Indemnified Parties shall indicate whether it requires the Supplier to provide for and conduct a defence or whether the

8 Integrated Liability Clause: Professional Services (High Risk) 2 Indemnified Parties elect to control and manage the defence of any Claims. SEE DRAFTING NOTE BELOW Upon receiving notice in writing from the Indemnified Parties that the Indemnified Parties requires the Supplier to provide for, and conduct a defence to, any Claim, the Supplier shall acknowledge in writing to the Indemnified Parties that it has assumed the defence, and shall defend, at its own costs, the Indemnified Parties against any and all Claims. The Supplier shall be entitled to appoint counsel, provided that the choice of counsel is reasonably satisfactory to the Indemnified Parties. The Indemnified Parties shall co-operate fully with, and assist the Supplier in, the defence against such Claims in all reasonable respects. The Supplier shall keep the Indemnified Parties fully apprised at all times as to the status of the defence. The Supplier does not have the authority or the right to compromise any claim, acknowledge any liability or agree to any judgement or settlement, on behalf of the Indemnified Parties, without the prior written approval of the Indemnified Parties. 7.4 Notwithstanding Article 7.3, and without prejudice to any other rights or remedies of the Indemnified Parties under this Agreement, at law or in equity: (a) until the Indemnified Parties receive notice that the Supplier has assumed the defence of the Indemnified Parties, the Indemnified Parties may defend, settle or otherwise compromise or pay the Claim, and the Supplier shall pay Damages arising out of or relating to that defence and any such settlement, compromise or payment; and (b) the Indemnified Parties may participate, at their own expense, in any defence and in any settlement discussions directly or through separate counsel of their choice. 7.5 Notwithstanding an initial election by the Indemnified Parties pursuant to Article 7.2 that the Supplier assume the defence of the Indemnified Parties, if, in the reasonable judgment of the Indemnified Parties, joint representation of the Supplier and the Indemnified Parties would at any time result in an actual or potential conflict of interest between them, then the Indemnified Parties are entitled to assume the defence of the Claim and appoint separate counsel of her choice and the reasonable fees and expenses of counsel for the Indemnified Parties shall be at the expense of the Supplier. 7.6 If the Indemnified Parties have elected to control and manage the defence of the Indemnified Parties under sections 7.2 or 7.5, the Supplier shall be obligated to pay for the costs of the defence of the Indemnified Parties as costs are incurred. Absent an actual or potential conflict of interest, the Supplier and the Indemnified Parties shall be jointly represented by counsel appointed by the Indemnified Parties. The Supplier shall co-operate fully with, and assist in, the defence against such Claims in all reasonable 1 The right to elect who will control the defence is not common. This election, if included, must be carefully considered in the event of claims arising. There is a potential conflict between this and between claiming coverage under the insurance required under this agreement. There is also the question of whether a supplier would be required to pay the costs of having a firm/lawyer chosen by the Indemnified Parties defend the claims.

9 Integrated Liability Clause: Professional Services (High Risk) 3 respects. The Indemnified Parties shall keep the Supplier fully apprised at all times as to the status of the defence. 7.7 Supplier hereby agrees to put in effect and maintain, for the duration of this Agreement, at its own cost and expense, with insurers acceptable to the Indemnified Parties, all the necessary and appropriate insurance that a prudent person in the business of the Supplier would maintain including, but not limited to, the following: (a) Commercial General Liability Insurance, on an occurrence basis, for third party bodily injury, personal injury and property damage, which includes the following provisions: (i) limits of not less than $*,000, per occurrence; (ii) per occurrence deductible of not more than $*0,000.00; (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) no aggregate limits are permitted, except in relation to [INSERT SPECIFIC COVERAGES SUCH AS (a) products and completed operations (b) Sudden and Accidental Pollution liability (c) Employee Benefits Errors & Omissions liability], which may have an aggregate limit of $*,000,000; SEE DRAFTING NOTE BELOW 2 the Indemnified Parties must be additional insureds with respect to all liability arising directly or indirectly from, or in any way relating to, the Agreement, including without limiting the foregoing, vicarious liability for the acts and omissions of the Supplier; blanket contractual liability coverage; cross liability and severability of interest with respect to each insured; employers liability and contingent employers liability; all risks tenants legal liability coverage (if applicable and with applicable sub-limits); non-owned automobile coverage with blanket contractual coverage for hired automobiles; broad form products hazard and completed operations liability; 2 Aggregates may be acceptable if adequate umbrella/excess insurance limits are provided and are listed below in clause (d).

10 Integrated Liability Clause: Professional Services (High Risk) 4 (x) (xii) the insurance is primary insurance without right of contribution from any other insurance carried by the Indemnified Parties; that the insurer will provide the Indemnified Parties with [number] days prior written notice of cancellation, termination or material change, and no such cancellation, termination or material change is valid unless such notice has been given. (b) Professional Liability (Errors & Omissions) Insurance, covering the Supplier, its employees, agents and independent contractors working for the Supplier (if permitted by this Agreement), for losses arising out of any error or omission in the rendering of, or failure to render, professional services and any other services in connection with this Agreement. Coverage under this insurance shall: (i) (ii) (iii) (iv) be maintained continuously, from and after [INSERT EARLIEST DATE OF WORK] and at all times thereafter during the Agreement; include coverage for copyright and trademark infringement; include coverage for unauthorized access; if such coverage is placed on a claims-made basis, (A) have no retroactive date, or a retroactive date no later than [INSERT DATE]; (B) include a 24-month extended reporting period; (v) (vi) (vii) (viii) (ix) have limits not less than $*000,000, each claim and in the aggregate annually; severability of interest with respect to each insured; have a deductible not greater than *0, each claim. SEE DRAFTING NOTE BELOW 3 ; waiver of subrogation against all Indemnified Parties; provide that breach of any of the terms or conditions of the policy, or any negligence or wilful act or omission or false representation by an insured or any other person, shall not invalidate the 3 Another option would be to have the deductible the greater of $10,000 or 2% of the Supplier s gross revenues.

11 Integrated Liability Clause: Professional Services (High Risk) 5 insurance for the purpose of providing coverage to, and paying any claims by, the Indemnified Parties; (x) the insurance shall be primary insurance without right of contribution from any insurance carried by the Indemnified Parties. SEE IMPORTANT DRAFTING NOTE BELOW 4 (c) Employee Dishonesty Insurance written on policy Form A, covering all employees of the Supplier and independent contractors working for the Supplier (if permitted by this Agreement). This insurance shall expressly deem property of the Indemnified Parties to be property of the Supplier, for the purposes of coverage, and shall include the following provisions: (i) a policy limit of $*0,000, for each claim and in the aggregate annually, and the deductible shall be not greater than $*0, per claim; (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) waiver of subrogation against all Indemnified Parties; loss inside the premises; loss outside the premises; money orders and counterfeit paper currency; depositor s forgery; third party computer and funds transfer fraud; credit card forgery; employee dishonesty; incoming cheque forgery; the insurance shall be primary insurance without right of contribution from any insurance carried by the Indemnified Parties. (d) Excess or Umbrella Liability Insurance, with the following coverage: SEE NOTE BELOW 5 4 The Indemnified Parties should not be an additional insured under any errors and omissions policy since this could trigger loss of coverage based upon an insured vs. insured exclusion.

12 Integrated Liability Clause: Professional Services (High Risk) 6 (i) a policy limit of $*0,000, Proof of Insurance - The Supplier shall provide the Indemnified Parties with proof of the insurance required by this Agreement in the form of valid certificates of insurance that reference this Agreement and confirm the required coverage, on or before commencing the Services contemplated by this Agreement, and further certificates confirming renewal on the same terms not less than thirty (30) days prior to expiration of any then current policy. Upon request, Supplier will provide The Indemnified Parties with certified copies of each insurance policy. The Supplier shall ensure that each of its subcontractors complies with the insurance requirements set out in this Agreement by obtaining similar types of insurance and providing The Indemnified Parties with proof of the acquisition and maintenance of such insurance. 7.9 Proof of WSIB Coverage If the Supplier is subject to the Workplace Safety and Insurance Act (WSIA), it shall submit a valid Workplace Safety and Insurance Board (WSIB) clearance certificate of WSIA coverage to the Indemnified Parties, prior to the commencement date of this Agreement. In addition, the Supplier shall, from time to time at the request of the Indemnified Parties, provide additional WSIB clearance certificates. Supplier covenants and agrees to pay when due, and to ensure that each of its subcontractors pays when due, all amounts required to be paid by it/its subcontractors, from time to time during the term of this Agreement, under the WSIA The Supplier shall duly and punctually pay, or cause to be duly and punctually paid, all premiums and other sums of money payable for maintaining any insurance required to be maintained pursuant to this Agreement, including any WSIA premiums, and shall, if required from time to time by the Indemnified Parties, provide or cause to be provided evidence, acceptable to the Indemnified Parties, of payment of premiums, failing which the Indemnified Parties shall have the right, in addition to and not in substitution for any other right it may have pursuant to this Agreement or otherwise at law or in equity, to pay any such amounts due and unpaid by the Supplier and its subcontractors, and/or obtain alternate or supplementary insurance and to deduct such amounts from any amount due and owing from time to time to the Supplier pursuant to this Agreement The Supplier shall advise the Indemnified Parties of any cancellation, material alteration or lapse of any policies of insurance required to be provided hereunder. If the Supplier fails to obtain and maintain or cause to be obtained and maintained such insurance or if such insurance is in an amount less than the amount required under this Agreement, the Indemnified Parties shall have the right (without any obligation to do so), upon two days notice to the Supplier, to effect such insurance and all costs, 5 This is an optional addition in order to provide adequate total limits for liability coverage. The Indemnified Parties should be consulted if this is to be used in place of having no aggregates for the CGL policy required in clause (a) of this section.

13 Integrated Liability Clause: Professional Services (High Risk) 7 expenses and other outlays by the Indemnified Parties shall be payable by the Supplier upon demand without prejudice to any other rights and recourse of the Indemnified Parties, and may be deducted from any amounts due and owing to the Supplier. No such insurance taken out by the Indemnified Parties shall relieve the Supplier of its obligations to insure hereunder The Indemnified Parties will not be liable for any personal injury (including death) or damage suffered by the Supplier, its employees, agents or independent contractors, or for any loss or damage to the property of the Supplier, based upon, occasioned by or in any way related to any services performed, purportedly performed or required to be performed by the Supplier under the Agreement, except to the extent caused by the intentional acts of a director, officer, employee or agent of the Indemnified Parties while acting within the scope of his or her office and/or employment. SEE DRAFTING NOTE BELOW 6 NOTE: Sections 7.13 to 7.15 PROVIDE A LIMITATION ON THE LIABILITY OF THE SUPPLIER. THIS SHOULD NOT BE USED UNLESS REQUIRED AS A RESULT OF NEGOTIATIONS BETWEEN THE PARTIES The Supplier s liability to the Indemnified Parties for Damages, arising from any breach or series of breaches of this Agreement, or otherwise related to this Agreement, shall not exceed [Instructions: insert a specific dollar amount in Canadian dollars (for example, * million Canadian dollars (C$*,000,000)) and/or insert a multiple of the contract value (e.g. X times the amount paid or payable by The Indemnified Parties under this Agreement) which, in either instance, should be no less than the estimated contract value, plus the amount of E&O Insurance which is required (i.e. $5,000,000.00)] The limitations provided in section 7.13 shall not in any way restrict or limit the indemnities provided for in section 7.1, with respect to Claims or Damages relating to third party Claims. In other words, section 7.13 does not apply in the case of Claims against Indemnified Parties or Damages Indemnified Parties are required to pay to a third party, and all such Damages payable by the Supplier shall not be applied toward the limitation of liability provided for in section [Instructions: also specify any other indemnities made by the Supplier in this Agreement that are given similar treatment, i.e. for which there are no limits on the liability of the Supplier) Nothing in Section 7.13 shall have the effect of waiving the obligation of the Supplier to maintain insurance pursuant to this Article 7 nor any right the Indemnified Parties may have to damages or otherwise in the event of default in the fulfilment of such obligation. 6 In some cases it may be acceptable to also include negligence of the Indemnified Parties.

14 Integrated Liability Clause: Professional Services (High Risk) The parties agree that the limitations contained in this Article 7 are reasonable in scope and that the terms and conditions of this Agreement have been negotiated taking into account such limitations. It is expressly acknowledged and agreed that the parties intended to provide for the efficient and economic allocation of the risks associated with, or in any way related to, this Agreement The obligations contained in this Article shall survive the termination or expiry of the Agreement.

15 INTEGRATED LIABILITY CLAUSE [GOODS LOW RISK] CIRCULATED FOR DISCUSSION AMONG LEGAL COUNSEL ARTICLE 7 INDEMNITY, INSURANCE AND LIMITATION OF LIABILITY 7.1 The Supplier hereby agrees at all times to indemnify and hold harmless the Indemnified Parties from and against any and all claims, allegations, actions, suits, demands, proceedings, obligations, liabilities, losses, costs, professional fees (including all legal fees and disbursements on a solicitor and own client scale), expenses or damages (including direct, indirect, consequential or special damages), by whomever made, sustained, brought or prosecuted, whether based in contract, tort, fiduciary duty or any other right at law or in equity, occasioned by, arising out of, or in any way related to, this Agreement, which may be brought or made against the Indemnified Parties or which the Indemnified Parties may suffer, sustain, pay or incur, even if such arises in whole or in part from the negligence of the Indemnified Parties. 7.2 The Supplier shall have in place, at its own cost and expense, all the necessary and appropriate insurance that a prudent person in the business of the Supplier would maintain, which includes, but is not limited to: commercial general liability insurance with limits of not less than $*,000, and a deductible of not more than $*0,000.00, per occurrence, and no aggregate limits. If the policy is placed on a claims-made basis, it shall have no retroactive date and must include a 24-month extended reporting period, severability of interest with respect to each insured, and waiver of subrogation against all Indemnified Parties. The policy must also provide that breach of any of the terms or conditions of the policy, or any negligence or wilful act or omission or false representation by an insured or any other person, shall not invalidate the insurance for the purpose of providing coverage to, and paying any claims by, the Indemnified Parties. This insurance shall be primary insurance without right of contribution from any insurance carried by the Indemnified Parties, and will provide that it may not be cancelled or materially changed except upon thirty (30) days prior written notice to the Indemnified Parties. Before providing the Product contemplated by this Agreement, the Supplier shall provide the Indemnified Parties with valid certificates of insurance that confirm the foregoing coverage is in place. NOTE: IF PRACTICAL, THE INDEMNIFIED PARTIES SHOULD BE SHOWN AS AN ADDITIONAL INSURED ON THE CGL POLICY BUT NEVER ON THE E & O POLICY NOTE: SECTION 7.3 LIMITS LIABILITY OF THE SUPPLIER. THIS SHOULD NOT BE USED UNLESS REQUIRED AS A RESULT OF NEGOTIATIONS. THE LIMITATION SHOULD NOT BE LESS THAN THE REASONABLY FORESEEABLE LOSSES ARISING FROM CLAIMS AND DAMAGES COMMONLY ASSOCIATED WITH THE CONTEMPLATED GOODS AND/OR SERVICES 7.3 The Supplier s liability to the Indemnified Parties for damages, arising from any breach or series of breaches of this Agreement, or otherwise related to this Agreement, shall not exceed [$00.00], provided however that this shall not in any way restrict or limit the indemnities provided for in section 7.1 as they relate to claims or demands by a third party.

16 DEFINITIONS INTEGRATED LIABILITY CLAUSE: GOODS (MEDIUM RISK) Claims includes any and all claims, allegations, actions, suits, demands, proceedings, obligations, liabilities by whomever made, sustained, brought or prosecuted, whether such claims are based in contract, tort, fiduciary duty or any other right at law or in equity; Damages includes direct, incidental, indirect, consequential and special damages or any loss of use, revenue or profit (by any person, entity or organization), losses, judgments or orders (including awards of costs against Indemnified Parties), and all expenses of any kind incurred by Indemnified Parties (including all professional fees and legal fees and disbursements (all on a solicitor and own client scale)); Deliverables means [to be defined] Indemnified Parties mean [your company/entity; consider any subsidiaries, parent or related companies, successors, assigns, predecessors, directors/officers, agents, appointees or employees]; Product means all goods to be delivered pursuant to this Agreement as more particularly described in a purchase order; Supplier means the [Contracting Party]; ARTICLE 7 INDEMNITY, INSURANCE AND LIMITATION OF LIABILITY 7.1 The Supplier hereby agrees at all times to indemnify and hold harmless the Indemnified Parties from and against any and all Claims and/or Damages occasioned by, arising out of, or in any way related to, this Agreement, which may be brought or made against the Indemnified Parties or which the Indemnified Parties may suffer, sustain, pay or incur, even if such Claims or Damages result in whole or in part from the negligence of the Indemnified Parties. Upon receiving written notice of any Claim from the Indemnified Parties, the Supplier shall acknowledge in writing that it has assumed the defence, and shall defend, at its own costs, the Indemnified Parties against any and all Claims. The Supplier shall be entitled to appoint counsel, provided that the choice of counsel is reasonably satisfactory to the Indemnified Parties. The Indemnified Parties shall co-operate fully with, and assist the Supplier in, the defence against such Claims in all reasonable respects. The Supplier shall keep the Indemnified Parties fully apprised at all times as to the status of the defence. The Supplier does not have the authority or the right to compromise any claim, acknowledge any liability or agree to any judgement or settlement, on behalf of the Indemnified Parties, without the prior written approval of the Indemnified Parties. 7.2 Supplier hereby agrees to put in effect and maintain, for the duration of this Agreement, at its own cost and expense, with insurers acceptable to the Indemnified

17 Integrated Liability Clause: Goods (Medium Risk) 2 Parties, all the necessary and appropriate insurance that a prudent person in the business of the Supplier would maintain including, but not limited to: Commercial General Liability Insurance, on an occurrence basis, for third party bodily injury, personal injury and property damage, which include limits of not less than $*,000, per occurrence, and a deductible of not more than $*0,000.00, per occurrence, with no aggregate limits. The Indemnified Parties must be additional insureds with respect to all liability arising directly or indirectly from, or in any way relating to, the Agreement, including without limiting the foregoing, vicarious liability for the acts and omissions of the Supplier, and the policy must include blanket contractual liability coverage, cross liability and severability of interest, and such other provisions as the Indemnified Parties may reasonably require. This insurance shall be primary insurance without right of contribution from any insurance carried by the Indemnified Parties, and will provide that it may not be cancelled or materially changed except upon thirty (30) days prior written notice to the Indemnified Parties. 7.3 Proof of Insurance - The Supplier shall provide the Indemnified Parties with valid certificates of insurance that reference this Agreement and confirm the required coverage, on or before the provision of Product to the Indemnified Parties pursuant to this Agreement, and further certificates not less than thirty (30) days prior to expiration of any current policy. Upon request, Supplier will provide certified copies of each insurance policy to the Indemnified Parties. The Supplier shall ensure that each of its subcontractors complies with the insurance requirements set out in this Agreement by obtaining similar types of insurance and providing the Indemnified Parties with proof of the acquisition and maintenance of such insurance. 7.4 If Supplier fails to obtain, maintain, or pay premiums for, the required insurance, The Indemnified Parties shall have the right, in addition to and not in substitution for any other right it may have pursuant to this Agreement or otherwise at law or in equity, to pay any such amounts and/or obtain alternate or supplementary insurance and all costs, expenses and other outlays so incurred may be deducted from any amounts due and owing to the Supplier. No such insurance taken out by the Indemnified Parties shall relieve the Supplier of its obligations to insure hereunder. 7.5 The Indemnified Parties will not be liable for any personal injury (including death) or damage suffered by the Supplier, its employees, agents or independent contractors, or for any loss or damage to the property of the Supplier, based upon, occasioned by or in any way related to the provision of Product to the Indemnified Parties pursuant to this Agreement, except to the extent caused by the intentional acts of a director, officer, employee or agent of the Indemnified Parties while acting within the scope of his or her employment. [IN SOME CASES IT MAY BE ACCEPTABLE TO ALSO INCLUDE NEGLIGENCE OF THE INDEMNIFIED PARTIES]

18 Integrated Liability Clause: Goods (Medium Risk) 3 NOTE: SECTION 7.7 LIMITS LIABILITY OF THE SUPPLIER. THIS SHOULD NOT BE USED UNLESS REQUIRED AS A RESULT OF NEGOTIATIONS. THE LIMITATION SHOULD NOT BE LESS THAN THE REASONABLY FORESEEABLE LOSSES ARISING FROM CLAIMS AND DAMAGES COMMONLY ASSOCIATED WITH THE CONTEMPLATED GOODS AND/OR SERVICES 7.7 The Supplier s liability to the Indemnified Parties for Damages, arising from any breach or series of breaches of this Agreement, or otherwise related to this Agreement, shall not exceed [$00.00] the limitations provided in this section 7.7 shall not in any way restrict or limit the indemnities provided for in section 7.1, with respect to Claims or Damages relating to third party Claims. Nothing in this Section 7.7 shall have the effect of waiving the obligation of the Supplier to maintain insurance pursuant to this Article 7 or of limiting the Supplier s liability for breach of such obligations. 7.8 The parties agree that the limitations contained in this Article 7 are reasonable in scope and that the terms and conditions of this Agreement have been negotiated taking into account such limitations. It is expressly acknowledged and agreed that the parties intend to provide for the efficient and economic allocation of the risks associated with, or in any way related to, this Agreement.

19 INTEGRATED LIABILITY CLAUSE [GOODS HIGH RISK] DRAFTING NOTE: It is very important to ensure this Article is coordinated with any warranties and/or statutory conditions. DEFINITIONS Claims includes any and all claims, allegations, actions, suits, demands, proceedings, obligations, liabilities by whomever made, sustained, brought or prosecuted, whether such claims are based in contract, tort, fiduciary duty or any other right at law or in equity; Damages includes direct, incidental, indirect, consequential and special damages or any loss of use, revenue or profit (by any person, entity or organization), losses, judgments or orders (including awards of costs against Indemnified Parties), and all expenses of any kind incurred by Indemnified Parties (including all professional fees and legal fees and disbursements all on a solicitor and own client scale); Deliverables means [to be defined] Indemnified Parties mean [your company/entity; consider any subsidiaries, parent or related companies, successors, assigns, predecessors, directors/officers, agents, appointees or employees]; Product means all goods to be delivered pursuant to this Agreement as more particularly described in a purchase order; Supplier means the [Contracting Party]; ARTICLE 7 INDEMNITY, INSURANCE AND LIMITATION OF LIABILITY 7.1 The Supplier hereby agrees at all times to indemnify and hold harmless the Indemnified Parties from and against any and all Claims and/or Damages occasioned by, arising out of, or in any way related to, this Agreement, which may be brought or made against the Indemnified Parties or which the Indemnified Parties may suffer, sustain, pay or incur, even if such Claims or Damages result in whole or in part from the negligence of the Indemnified Parties. 7.2 The Indemnified Parties shall provide reasonably prompt notice to the Supplier in writing of the matters in respect of which the indemnities may apply and of which the Indemnified Parties has knowledge. Any failure to provide reasonably prompt notice once the Indemnified Parties has knowledge will relieve the Supplier of its indemnity obligations hereunder, but only to the extent that the rights of the Supplier are prejudiced by such failure. In any such notice, the Indemnified Parties shall indicate whether it requires the Supplier to provide for and conduct a defence or whether the

20 Integrated Liability Clause: Goods (High Risk) 2 Indemnified Parties elect to control and manage the defence of any Claims. SEE DRAFTING NOTE BELOW Upon receiving notice in writing from the Indemnified Parties that the Indemnified Parties requires the Supplier to provide for, and conduct a defence to, any Claim, the Supplier shall acknowledge in writing to the Indemnified Parties that it has assumed the defence, and shall defend, at its own costs, the Indemnified Parties against any and all Claims. The Supplier shall be entitled to appoint counsel, provided that the choice of counsel is reasonably satisfactory to the Indemnified Parties. The Indemnified Parties shall co-operate fully with, and assist the Supplier in, the defence against such Claims in all reasonable respects. The Supplier shall keep the Indemnified Parties fully apprised at all times as to the status of the defence. The Supplier does not have the authority or the right to compromise any claim, acknowledge any liability or agree to any judgement or settlement, on behalf of an Indemnified Parties, without the prior written approval of the Indemnified Parties. 7.4 Notwithstanding Article 7.3, and without prejudice to any other rights or remedies of the Indemnified Parties under this Agreement, at law or in equity: (a) until the Indemnified Parties receive notice that the Supplier has assumed the defence of the Indemnified Parties, the Indemnified Parties may defend, settle or otherwise compromise or pay the Claim, and the Supplier shall pay Damages arising out of or relating to that defence and any such settlement, compromise or payment; and (b) the Indemnified Parties may participate, at their own expense, in any defence and in any settlement discussions directly or through separate counsel of their choice. 7.5 Notwithstanding an initial election by the Indemnified Parties pursuant to Article 7.2 that the Supplier assume the defence of the Indemnified Parties, if, in the reasonable judgment of the Indemnified Parties, joint representation of the Supplier and the Indemnified Parties would at any time result in an actual or potential conflict of interest between them, then the Indemnified Parties are entitled to assume the defence of the Claim and appoint separate counsel of her choice and the reasonable fees and expenses of counsel for the Indemnified Parties shall be at the expense of the Supplier. 7.6 If the Indemnified Parties have elected to control and manage the defence of the Indemnified Parties under sections 7.2 or 7.5, the Supplier shall be obligated to pay for the costs of the defence of the Indemnified Parties as costs are incurred. Absent an actual or potential conflict of interest, the Supplier and the Indemnified Parties shall be jointly represented by counsel appointed by the Indemnified Parties. The Supplier shall co-operate fully with, and assist in, the defence against such Claims in all reasonable 1 The right to elect who will control the defence is not common. This election, if included, must be carefully considered in the event of claims arising. There is a potential conflict between this and between claiming coverage under the insurance required under this agreement. There is also the question of whether a supplier would be required to pay the costs of having a firm/lawyer chosen by the Indemnified Parties defend the claims.

21 Integrated Liability Clause: Goods (High Risk) 3 respects. The Indemnified Parties shall keep the Supplier fully apprised at all times as to the status of the defence. 7.7 Supplier hereby agrees to put in effect and maintain, for the duration of this Agreement, at its own cost and expense, with insurers acceptable to the Indemnified Parties, all the necessary and appropriate insurance that a prudent person in the business of the Supplier would maintain including, but not limited to, the following: (a) Commercial General Liability Insurance, on an occurrence basis, for third party bodily injury, personal injury and property damage, which includes the following provisions: (i) limits of not less than $*,000, per occurrence; (ii) per occurrence deductible of not more than $*0,000.00; (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) no aggregate limits are permitted, except in relation to [INSERT SPECIFIC COVERAGES SUCH AS (a) products and completed operations (b) Sudden and Accidental Pollution liability (c) Employee Benefits Errors & Omissions liability], which may have an aggregate limit of $*,000,000; SEE DRAFTING NOTE BELOW 2 the Indemnified Parties must be additional insureds with respect to all liability arising directly or indirectly from, or in any way relating to, the Agreement, including without limiting the foregoing, vicarious liability for the acts and omissions of the Supplier; blanket contractual liability coverage; cross liability and severability of interest with respect to each insured; employers liability and contingent employers liability; all risks tenants legal liability coverage (if applicable and with applicable sub-limits); non-owned automobile coverage with blanket contractual coverage for hired automobiles; broad form products hazard and completed operations liability; 2 Aggregates may be acceptable if adequate umbrella/excess insurance limits are provided and are listed below in clause (d).

22 Integrated Liability Clause: Goods (High Risk) 4 (x) (xii) the insurance is primary insurance without right of contribution from any other insurance carried by the Indemnified Parties; that the insurer will provide the Indemnified Parties with [number] days prior written notice of cancellation, termination or material change, and no such cancellation, termination or material change is valid unless such notice has been given. (b) Excess or Umbrella Liability Insurance, with the following coverage: SEE NOTE BELOW 3 (i) a policy limit of $*0,000, Proof of Insurance - The Supplier shall provide the Indemnified Parties with proof of the insurance required by this Agreement in the form of valid certificates of insurance that reference this Agreement and confirm the required coverage, on or before the provision of Product to the Indemnified Parties pursuant to this Agreement, and further certificates confirming renewal on the same terms not less than thirty (30) days prior to expiration of any then current policy. Upon request, Supplier will provide the Indemnified Parties with certified copies of each insurance policy. The Supplier shall ensure that each of its subcontractors complies with the insurance requirements set out in this Agreement by obtaining similar types of insurance and providing the Indemnified Parties with proof of the acquisition and maintenance of such insurance. 7.9 The Supplier shall advise the Indemnified Parties of any cancellation, material alteration or lapse of any policies of insurance required to be provided hereunder. If the Supplier fails to obtain and maintain or cause to be obtained and maintained such insurance or if such insurance is in an amount less than the amount required under this Agreement, the Indemnified Parties shall have the right (without any obligation to do so), upon two days notice to the Supplier, to effect such insurance and all costs, expenses and other outlays by the Indemnified Parties shall be payable by the Supplier upon demand without prejudice to any other rights and recourse of the Indemnified Parties, and may be deducted from any amounts due and owing to the Supplier. No such insurance taken out by the Indemnified Parties shall relieve the Supplier of its obligations to insure hereunder The Indemnified Parties will not be liable for any personal injury (including death) or damage suffered by the Supplier, its employees, agents or independent contractors, or for any loss or damage to the property of the Supplier, based upon, occasioned by or in any way related to the provision of Product to the Indemnified Parties pursuant to this Agreement, except to the extent caused by the intentional acts of a director, officer, 3 This is an optional addition in order to provide adequate total limits for liability coverage. The Indemnified Parties should be consulted if this is to be used in place of having no aggregates for the CGL policy required in clause (a) of this section.