Contract Risk and Reality: Working Towards Balance

Abstract

“We can’t possibly sign this! How could the client think that this could be considered a fair and balanced contract?” I said, referring indignantly to the thick set of terms and conditions in front of me. The offending term was an atrocious indemnity clause in favour of the client whereby our company would provide the client with an indemnity from and against any and all losses that arose out of any property damage to the offshore asset while our company’s personnel were aboard, without limitation. How could we accept this risk? Strict liability in the plainest term – zero connection to fault, just another attempt to make us a form of insurance against loss. “Forget it”, I said, “You can escalate this within the decision chain if you want, but we cannot agree to uncapped liability that arises if we happen to have someone there at the same time as property damage occurs- the risk is too great!” My bid manager nodded, flipping through the papers in his hand, looking for something. Finding it, he cleared his throat and said “The scope of work is a 3-month, desk-based study and modelling with no site visits to either the client’s offices or to any offshore asset.” I had to smile and roll my eyes at my misplaced overreaction, “Ahhhhhhh, ok - let it fly. But please let the client know that we won’t be in a position to accept these same terms in the future for any offshore work”.