Tuesday, April 24, 2018

Does it get you where you wanna go … with a warranty (and indemnity)? **

Previous posts have considered various aspects of warranties and indemnities (see -What is a warranty?Indemnities).

Generally, the scope of recovery and damages that may be obtained will be greater where an indemnity is provided.

This is because an indemnity is effectively a promise to either reimburse or make good relevant issues if they arise.

Furthermore, indemnities:
  1. Do not require the person giving the indemnity to have actually caused the loss – in other words, regardless of how the loss arises, liability will be triggered. 
  2. Common law rules that normally limit the scope of liability, such as remoteness or an obligation to mitigate losses, do not apply in relation to indemnities. 
In contrast, a warranty only provides a promise that certain statements are correct. Practically this means:
  1. A party seeking to claim in relation to a breach of warranty must do so by seeking damages.
  2. The common law principles mentioned above of remoteness and an obligation to mitigate potential losses do apply. 
** For trainspotters, ‘does it get you where you wanna go ... with a warranty’ is a line from a song named ‘Days That Used To Be’ by Neil Young and Crazy Horse from their seminal 1990 album ‘Ragged Glory’ – listen here – www.youtube.com/watch?v=SQeM2yLSiss

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