Losses

[jcyjr36]

What is the name of your state? State = New York

This question is regarding the "INDEMNIFICATION; LIMITATION OF LIABILITY" section of my agreement.

The other party redlined the agreement and proposed striking "losses." They define losses as "revenue" and "profits." They claim it's not customary to included losses in an indemnification/limitation of liability clause.

Here's the clause...

Partner shall indemnify, defend (at its own cost) and hold COMPANY and its affiliates harmless from and against any and all Claims brought by a third party against COMPANY and its affiliates, including paying all losses, liabilities, damages, fines, penalties, costs and expenses, including reasonable attorney’s fees and costs finally awarded by a court of competent jurisdiction to such third party pursuant to such Claim, to the extent based on or arising out of (i) Partner's gross negligence, (ii) Partner's willful or intentional misconduct, (iii) Partner's material breach of any of the terms and conditions of this Agreement, or (iv) Partner's violation of any applicable federal, state, city, administrative or municipal law, statute, ordinance, code, rule or regulation in providing the Acquisition Services to COMPANY and its affiliates, except, in each case to the extent such losses, liabilities, damages, fines, penalties, costs and expenses are subject to indemnification by COMPANY and its affiliates pursuant to Section 10.2.

 

[quincy]

What is the name of your state? State = New York

This question is regarding the "INDEMNIFICATION; LIMITATION OF LIABILITY" section of my agreement.

The other party redlined the agreement and proposed striking "losses." They define losses as "revenue" and "profits." They claim it's not customary to included losses in an indemnification/limitation of liability clause.

Here's the clause...

Partner shall indemnify, defend (at its own cost) and hold COMPANY and its affiliates harmless from and against any and all Claims brought by a third party against COMPANY and its affiliates, including paying all losses, liabilities, damages, fines, penalties, costs and expenses, including reasonable attorney’s fees and costs finally awarded by a court of competent jurisdiction to such third party pursuant to such Claim, to the extent based on or arising out of (i) Partner's gross negligence, (ii) Partner's willful or intentional misconduct, (iii) Partner's material breach of any of the terms and conditions of this Agreement, or (iv) Partner's violation of any applicable federal, state, city, administrative or municipal law, statute, ordinance, code, rule or regulation in providing the Acquisition Services to COMPANY and its affiliates, except, in each case to the extent such losses, liabilities, damages, fines, penalties, costs and expenses are subject to indemnification by COMPANY and its affiliates pursuant to Section 10.2.

You will want an attorney licensed to practice in your area personally review and analyze the contract for you - or better, have a business law attorney draft a contract for you that meets your particular needs.

Contract review exceeds the scope of this forum. Sorry.

 

[adjusterjack]

The other party redlined the agreement and proposed striking "losses."

This the same person who wants to change "breach" to "material breach"?

Begs the question. Do you need this partner or does he need you? The point being - which one of you has the leverage? If he needs you, he can sign your contract as is or walk. If you need him, you change what he wants.

In all my years of owning rental properties I never once rewrote my lease to please a prospective tenant. It was either accept the lease as is or walk away. That was my choice.

 

[quincy]

The smart business person starts and stays in business by not scrimping on business essentials, like insurance and contracts.

You want carefully drafted contracts that can withstand legal challenge. This is best accomplished by hiring an experienced attorney. And you want insurance coverage enough to cover any lawsuit that arises despite your best efforts to avoid one.

 

[Taxing Matters]

The other party redlined the agreement and proposed striking "losses." They define losses as "revenue" and "profits."

That's an odd definition. The word "losses" in business can have several meanings. If the term is not expressly defined in the contract and there is a dispute over it later that goes to court or arbitration, the judge or arbiter will read the entire agreement to see if other parts of the contract provides clues as to what the parties intended the term to mean. That may turn out to be a definition not favorable to you. That's a risk you may want to eliminate by specifying exactly what kind of losses are meant to be covered. When a term has broad definition or multiple definitions it's best to put in the contract what that term means. All the more reason for you to have the contract reviewed by an attorney, as was suggested in your other thread on this business deal.

 

[jcyjr36]

You will want an attorney licensed to practice in your area personally review and analyze the contract for you - or better, have a business law attorney draft a contract for you that meets your particular needs.

Contract review exceeds the scope of this forum. Sorry.

Thank you @Taxing Matters. I should have read the forum directions more clearly regarding scope of the forum. Thanks again.

 

[jcyjr36]

The smart business person starts and stays in business by not scrimping on business essentials, like insurance and contracts.

You want carefully drafted contracts that can withstand legal challenge. This is best accomplished by hiring an experienced attorney. And you want insurance coverage enough to cover any lawsuit that arises despite your best efforts to avoid one.

Agreed. Thanks @quincy.

 

[jcyjr36]

This the same person who wants to change "breach" to "material breach"?

Begs the question. Do you need this partner or does he need you? The point being - which one of you has the leverage? If he needs you, he can sign your contract as is or walk. If you need him, you change what he wants.

In all my years of owning rental properties I never once rewrote my lease to please a prospective tenant. It was either accept the lease as is or walk away. That was my choice.

Morning @adjusterjack. Correct. Same person. I have the leverage.

 

[quincy]

You should not give up your protections in a contract to appease the other party. In other words, the other party should not dictate the terms of your contract.

 

[Zigner]

You should not give up your protections in a contract to appease the other party. In other words, the other party should not dictate the terms of your contract.

Generally, both sides should have a little bit of give and a little bit of take.

 

[quincy]

Generally, both sides should have a little bit of give and a little bit of take.

Possibly. But the protections offered in a contractual agreement should not be diluted to satisfy the wants of only one party.

The terms used in the contract can be, and should be, clarified so there is no misunderstanding by either party to the agreement. I however remain concerned that the other party has suggested modifying “breach of contract” to allow for minor breaches in the terms. It makes me question the other party’s intentions.

 

[LdiJ]

If it is of any use, I personally would not sign a contract that included losses the way that your contract does. The way that your contract uses the word losses it could be argued to mean that if the company doesn't make money in the ordinary scheme of things, and you can find a way to make that my fault, that I would be responsible to make up the difference. What I think you intend your contract to say is that if your partner does something stupid/illegal/negligent etc that he/she would be responsible for the costs arising from that act.

This is why you want an attorney to help you with the wording. In order for a contract to be workable it has to be fair.

 

[quincy]

Here, for those who might be interested, is a link to New York’s Partnership Law:

https://casetext.com/statute/consolidated-laws-of-new-york/chapter-partnership